Attended the concall but missed a few minutes intermittently due to work calls.
Concall brief-
-Industry growth 27% CAGR. Company likely to cross the industry growth rate and grow at a faster pace.
-Margins will be maintained.
-5 new clients signed. Mix of smartphone and computer/laptop waste. Not disclosed for confidentiality sake. Agreements ranging from one year to 3 years. No clause of extension in the agreements.
-EPR certificates will be a game changer for the company.
-Company is choosing only those products where there is not much competition.
-Current capacity 7200 MTA.
New capacity being set-up 18,000 MTA.
-Capex 45 Cr from internal accruals.
-Will achieve full capacity utilisation next year.
Competition - Yes, there is but market size is huge so all competition can co exist. List of competition available on CPCB website.
Org and unorganised mkt. 4mn MT market size. Govt tgt 2mn MT this year. 5mn next year.
40-50% will remain informal sector.
We are focusing on corporates only.
Revenue distr-
Metal
Plastic
Glass
Refurbished eqpt.
Li ion bty recycling licence obtained.
Earlier all bty were being exported to Korea now they will be recycled here as govt wants it to be fine within India and Li so recycled can be used in batteries in India. No plans for car battery recycling as of now. (Makes sense as there’s still time when they come up for recycling in terms of scale).
ECO Recycling Limited - Concall - 27th October 2023
Just want to add few points in from the Concall.
The total market share is around 4 MMT and out of this 50% is in formal sector. Currently industry CAGR is 27% and ECORECO is expected to have better growth then the industry average.
Current capacity is 7200 MTA and new capacity addition of 18K MTA is going to be live by the end of FY 24. The total capex for this additional capacity is Rs 45 Cr and company has already spend Rs 30 Cr and the additional 15 Cr will be spent in the current FY24.
Capacity utilization: Current the company is using 30% of its total installed capacity (7200 MT) and has generated revenue of Rs 7.10 Cr in the September quarter of 2023. With the wining 5 more new clients/producers the company is expecting its current utilisation to go upto 60-70% in the coming quarters. So, the total installed capacity after the above capex is going to be 25K MT at the end of FY24 and with the expected utilisation of 60% in FY 25 the expected revenue can be around 80 Cr and Rs 100 Cr above for the next FY. So there is a good visibility in the revenue and company has ensured that its going to maintain its current margin of 30% (operating margin).
For the battery recycling current capacity is 3K MT.
assets trunover is .5 and ROE is single digit .
top line double digit so .My points is can this company can gave EPS GROWTH above 15-20% next 5-6 years.can this company sustain with lwo ROE ? plz anyone
There arent any listed competitors
But as per the last 2 concalls, the growth is massive in this sector, and they have 3x their capacity when their utilizations were just 30%. On top, the mgmt has increased its stake in the commpany, that just shows how confident the mgmt is. They have got recognition from the PMO in Mann ki baat also and a grant for Rs 6 Cr from the GOI.
And think about how much e-waste we generate. I myself have 3-4 keyboards at home(as waste). Imaging how much all of India has, specially the corporates.
And this is just starting, we have to manage e-waste else it will be very difficult to handle all the waste.
All we need is that the laws regarding e-waste are enforced properly
actually their business depend on big company like hp dell and lenovo etc.so if hp manufacture 1000 laptop in 2023 , they have to recycle half of this like 500.then entry happen eco recycle if eco in 2023 recycle 500 laptop then hp can buy this 500 laptop credit from eco without any recycle and show to government .so basically eco don’t have any pricing power they have limited buyer for their credit .the opportunity is high but risk also high .
Pls read their last qtr transcript where this Q has been asked. They have already invested 30Cr so far, all from internal accrual.
Remaining 15Cr they plan on funding through internal accruals as well.
