Ganesha Ecosphere - Green Earth play

Stock Opportunities Untested - but worth a good look
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Another interesting aspect with Ganesha is currently there is a duopoly in rPET chips (food grade) recycling space in the market which not many know of. All other players can produce PET flakes which is the raw material to rPET chips and also rPET chips (non-food grade) but the rPET chips (food grade) is currently produced by only Ganesha Ecosphere and SriChakra Polyplast (Unlisted player). Having visited the latter’s factory during a field visit, I realised the potential that this space has and since there are no other players in the rPET food grade chips, its basically an early mover advantage for both these companies. There are other companies which are announicng capex for rPET chips machinary…however it is said that the machinary installation to deal conversion phase takes close to 1-2 years due to supplier order fufillment, machinary installtion, product testing, etc.

Further, the capex plans announced by the industry players, only signfies the potential that this space has and Ganesha being the only listed company currently in rPET food grade space, is only bound to grow further with its additional capex plans

https://www.thehindu.com/business/investment-in-pet-recycling-industry-to-double/article68948181.ece

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Q2 FY2024-25 Concall Notes (November 14, 2024)

Financial results-

Q2 FY2024-25: Company achieved turnover of INR 386.8 crore on consolidate basis, which is higher by 39% from corresponding last quarter. We achieved highest quarterly EBITDA of INR 55 crore which is 14.3% of the operating revenue. It is a significant improvement over the EBITDA of INR 25.32 crore or 9.09% what we had achieved during Q2 FY24. In absolute numbers, EBITDA was INR 13,900 per ton.

H1 FY2024-25: On half yearly basis, the operational revenue is at INR 723.35 crore, EBITDA INR 102.97 crore and PAT is at INR 49.65 crore during H1FY25. These numbers for corresponding last quarter are INR 532.6 crore, 50.83 crore and INR 6.45 crore respectively.

Segment Overview:

rPSF business is continuously facing headwinds due to over- capacity in yarn segment and cheap import of fabric in the country. So, we are trying to further improve our export business as well as our value-added products, particularly from yarn segment to other non-woven technical textile segments, where the pricing is much better than our yarn spinning business.

rPET Granules segment is doing well and with operationalization of third production line. Our product is well established with beverage brands in terms of quality as well as performance. We have on boarded with two more brands during the quarter and demand from export market is also floating to us. We have very good demand for next 12 months and may not be able to accept/ fulfil the orders. As far as the approval of the buyers or the brand owners are concerned, yes, they are going to audit your each and every setup (this means the bottlers will also conduct audit of Odisha plant before placing order from that plant).

Odisha Expansion: To address and to encash the rising demand, we are on course with our expansion plan, which is finally being set up in Odisha with an installed capacity of 45,000 tons and an estimated capital outlay of INR 450 crore. Exact location will be finalized very shortly. There will be two lines of 22,500 tons which will operationalize in one phase.

We are having the sufficient liquidity with us and accruals are also started to come from the Warangal plant. So, we are not looking for raising of funds for this expansion. For the rPET granules so we are looking out a working capital cycle of 45 to 50 day. As regards total capital employed, we are looking for about INR550 crores for the project, including the working capital.

With this expansion, total capacity of the rPET granules would be 87,000 tons.

Better margins expected in new facility as there is power and capital subsidy in Odisha and Opex is expected to be lower because higher capacity per line and the power consumption would be lower by 15% as compared to our Warangal lines

We have already placed the order for the machinery because the lead time of the machinery is 12 to 15 months, and we are trying to commence the production by March 2026. Useful life of the asset would be 18 to 20 years. current average cost of borrowings 8.3% to 8.5%.

Warangal: In Warangal, our total sales volume is about 70% rPet granules. And the rest 30% is the fiber and the yarn. And as about the ramp-ups, we are already working at about 72% capacity in rPet granules and we expect it to, by March, it will ramp up to 90% plus level. And we are also expecting that our RPSF, we are already 80%-85% and that will also ramp up to 90% by March. So, by March, in RPSF and rPET granules, we will be around 90% capacity and for the filament yarn, we are expecting it will be around 70%-75% by March and 80%-85% after that. On a quarterly basis, we are expecting a run rate of about INR160-175 crores from Warangal plant. At Max capacity utilization, Warangal has revenue potential of 200 crore per quarter.

From Warangal plant, 500-550 crore revenue expected for 2024-25 and 750 crore for 2025-26. We are operating at about 22% EBITDA margins at our Warangal project

Race Eco Chain JV: The investment is for getting the raw material. Wash lines are being arranged in different part of countries to cover up the material locally in a region of, let’s say, 200 kilometers radius.

Sales: Currently, we are doing year-long contracts. And next year, obviously, we will start the long-term discussions. Once the regulation is in place and clarity on the actual demand and the demand-supply gap emerges, then it would be feasible to enter into ling term contracts.

Misc

  • On the consolidated basis, the average realization is about INR. 95, for Warangal plant >100.
  • For the current fiscal, we are expecting a top line of INR1,500 to INR1,600 crores with EBITDA of 14.5% to 15%. On a long-term basis, we are looking at EBITDA of about 16% to 17%. Expecting a revenue growth of about 25% to 30% every year for the next couple of years.
  • Warrant conversion is due in May 2025. Around INR110 crores will come from the warrants. The subsidy, we are expecting to get about INR30-INR40 crores in March quarter. And we are already having INR150 crores cash in our books.

Disclosure- Invested

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I guess the business has reached its upside as of now with all rPET lines coming online (Currently there are at 70% to 80% capacity).
Next big jump will come only after installation of new machines at Oddisha in March-26.
However at the end of the day they are making PET which is highly dependent upon crude price. Last year with crude at 80-85 USD and with it going up rPET was looking good but now with crude at around 70 Levels, I guess they will be hit hard on profitability. (as input price of collected recycled bottles remains same). I am not sure why market is not factoring in? So I believe FY25 will be challenging for them from profitability perspective.
DISC- Invested from lower levels

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whats the TAM looks like for the rPET division?
given the factor that its a capex intensive business, whats the max range of net margin could it reach in the future? (when running at almost full capacity)

last, are they prone to any disruption due to the innovations in this field?

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Management had explained it well in concall

With the govt now getting serious about EPR compliance, the rPET market isn’t just about demand anymore — it’s being pushed by regulations. Brands have to use 30% recycled content in packaging by FY26. So yeah, the TAM is basically regulation-driven now.

But here’s the catch , The price gap between rPET and virgin PET (vPET) also plays a huge role.

If rPET is cheaper than vPET → brands happily buy
If rPET gets too expensive → some brands either delay or just pay the penalty

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This will bring competition in the market. Already, Reliance Industry has done capex in this segment and is providing rPET at a cheaper price compared to other players

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https://thebrighterworld.com/detail/Indias-Green-Leap-Food-Grade-rPET-Regulations-Pave-Way-for-Sustainable-Packaging/ODU1NA

Several companies, including Srichakra Polyplast, Reliance Industries, Ganesha Ecopet, Uflex Limited, and Ester Industries Limited, have already received approval from FSSAI to manufacture food-grade rPET resin. These companies are using advanced recycling technologies, such as Erema VACUNITE and Starlinger’s secondary recycling process, to produce high-quality rPET resins . The introduction of food-grade rPET regulations in India marks a significant step towards a more sustainable future for the packaging industry.

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Q4- 2025 concall+ investor presentation summary

1…Crossed Rs. 200 crore in EBITDA and Rs. 100 crore in PAT for the first time.

2…Raw material
=Raw bottle scrap prices soared all time high during the quarter though prices have started to cool-off during May, 2025.

3…rPET fibre(rPSF)(textile)

=Legacy business ( rPSF fibre and granules) under pressure due to:

A…High input (scrap bottle) prices,
-High volatility in scrap bottle pricing, driven by increased exports of washed PET flakes (intermediate).

B…Crude price down , widening gap between vpsf and rpsf

4…rPET granules(bottle)

=Sales Volume of rPET granules moderated due to rising gap between virgin and rPET granules

=Gap widened to 30–35% due to falling crude (lowering virgin PET) and high bottle scrap prices

=Food-grade rPET granules “set a new benchmark in the industry.”
80% capacity utilization for rPET

=High entry barrier in rPET: “Very highly technical product…not everyone will be able to manufacture very high quality rPET production.”

5…Value added portfolio

=Value-added products currently ~40% of mix; targeted to rise to 55–60% in two years.

=Value-added product portfolio growing (antimicrobial fiber, hollow conjugated fiber, dyed fibers, etc.).

=End-user industries for value-added products: geotextiles, automotive, carpets, technical textiles, apparel, and home textiles.

=Focus on increasing market share in technical textiles and
household textiles sector.

6…rPET granules

=Strategically realigning product portfolio towards high-margin, value-added products(rPET granules)

=rPET fibres v/s rPET granules capacity

2023@ fibre@90% granules@0%
2024@ fibre@80% granules@10%
2025@ fibre@50% granules@20%
2027@ fibre@ 40% granules@50%

So company has kept fibre capcity constant while hugely expanded granulea capacity from 2024/2027

7…Future growth guidance

=FY26 Revenue Guidance:
Rs. 1,700–1,750 crore (revised down from earlier Rs. 1,800–1,900 crore due to muted base business and stable rPET volumes).

=FY27 Revenue Guidance:
Dependent on new capacity ramp-up.

=FY28 Revenue Potential: Rs. 2,600–2,700 crore post-expansion.

=EBITDA Margins:
Consolidated margins expected to remain at improved levels (14–15%)

8…CAPEX:

Rs. 725 crore over 2 years; Rs. 90–100 crore already spent.
Fully funded; no immediate funding concerns.

A=600cr@orissa@greenfield
@67,500 MTPA@rPET granules @by H1FY27

B…125cr@warangal@brownfield
@22,500 MTPA @rPET granules @ Q4FY26

10…Capacity utilization
=Capacity utilisation in standalone business was of 99% and for Warangal business, it was 63%.

11…EPR Mandate & Plastic Waste Management Rules

=EPR (Extended Producer Responsibility) mandates 30% recycled content from April 1, 2025.
Management: “Plastic waste management rules…have also been implemented as per the schedule.”
Initial compliance slow; many brands still ramping up rPET usage.

12… Conclusion:

=Management Stance
Management remains optimistic for the medium-to-long term, citing:

A…Stabilization and ramp-up of Warangal and new capacities.

B…Regulatory tailwinds (EPR, FTA with UK).

C…Shift towards value-added products and

D…exports.

=However, they acknowledge
A…short-term challenges in legacy business

B…input price volatility

C… Slow initial response to the EPR mandate.

Disc…invested

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