Hi-Green Carbon Ltd – Play on Renewable energy endeavoring wealth from waste

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Does anyone have a calculation of the ROCE generated in this biz ?

I get that the Dhule plant is ~ 50 Cr of capex (not sure if the subsidy amount are subtracted in this figure) + 10 Cr of WC (as per recent con call). That is a total of 60 Cr of capital employed for a 100 TPD plant.

What are the revenue and EBITDA margins for 100 TPD capacity at say an 80%utilisation rate could anyone pls tell ?

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The company intends to set up one plant every year. So the expenses related to setting up of the plant, which was seen in h2 results and which management says are “one off”, will actually recur every year with every plant. So, with time and improved capacity utilisation, while margins may improve at plant level, at company level, I dont think we should expect reversion to earlier margin levels. As the company grows, and sets up more plants, the incremental impact of the “one off” plant set up expenses will become relatively lesser as they would be absorbed over a wider base.

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Sir, final product is rCB which is itself a commodity , Sales from each plant will remains same over the years while the maintenance and other things will increase.

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https://nsearchives.nseindia.com/corporate/HIGREEN_22102025220000_Intimation_Fire_Samsara.pdf

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For anyone still tracking this - What are your views about the recent results and any possible reason on why we are witnessing such a steep correction?

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Below is the data for two companies in Europe which as a business model, product quality, output, product profile similar to that of Hi-green where all company has an output of TPO, rCB and Syngas with all three utilizing it back in the operations but, still I feel there is a huge gap in terms of financing which this two players took and what hi-green took to have capacity more than them.

Pyrum Innovations AD (Germany)
The company has a current capacity of 23,000 TPA this is after tripling of capacity in 2024-25 with two new reactors. This company also plans to enter into pelletizing operations in FY26 this process is done post grinding of rCB as pellets are much more easy to store.
The company has plan to setup new plant for similar capacity and that facility will come live in 2027 but, company has multiple JVs and SPVs for similar capacity with the target to have joint capacity of 250,000 TPA by FY30.
The company’s plant is based on patented thermolysis technology which is also a type of continuous pyrolysis technology which Hi-green has but this is vertically designed stationery reactors which is all electric start and self-sufficient via syngas generated during the process though all tech remains similar to that of Hi-green with similar capacity hi-green has a horizontal setup.

Dillingen expanded from 10 TPD (original pilot) → 30 TPD TAD 1 2 3, FY2425 → 20,000 tpa with full grinding/pelletizing Q3 2025 onward) till FY24 the company was more of a R&D stage it is now that it has started to commercialize on the research and its output. FY21 24 were pre-revenue / early demo phase with lumpy capex and R&D spending. The company has setup one of the world’s largest pelletizing plant with capacity of 1650kg/ hour input & 1350kg/ hour output though, Hi-green also has a line for this but details are not available in public domain.

Perl-Besch (new site, Moselle region) under construction: 20,000 tpa, funded via BASF financing; official ground-breaking Nov 2025, targeting end-2025 operational but, it is already delayed into H2FY6.

Period Key Milestone Context
2008–2015 Company founded; R&D on pyrolysis tech Pre-commercial phase; labs/pilot scale.
2015–2018 Dillingen pilot plant (10 TPD) commissioned Proof-of-concept; early commercial trials; limited revenue.
2018–2021 Scale-up to 10,000 tpa; BASF €16m investment (2020) Strategic validation; BASF ChemCycling partnership signed.
2021 IPO (Frankfurt Scale, Oslo Euronext Growth) Raised ~€35m+ capital for expansion; stock peaked early 2021 before extended decline.
2021–2023 Early commercialization; Continental & Schwalbe partnerships Revenue ramped from €1.1m (FY21) to €1.1m (FY23), but still mostly consulting/oil. rCB sales minimal.
2023–2024 TAD 2 & 3 reactor construction; Perl-Besch planning Heavy capex; own work capitalized €9m+ (FY24); no revenue inflection yet.
2024–2025 TAD 2 & 3 commissioning (Dec 2024), first quality validation Revenue €2.0m (FY24), growing 62% 9M 2025; still pre-full-scale rCB.
Q3 2025–Q4 2025 Grinding/pelletising mill commissioned; rCB pellet sales begin Expected inflection; Perl-Besch ground-breaking in H2FY26.
2026–2027 Perl-Besch operational (H1/H2 2026); EBITDA breakeven targeted 2026, net profitability 2027 Management guidance for inflection.

Scandinavian Enviro Systems AB
The company has a modular reactor technology which it claims to have been developed after 20 years of research not much details are available on this technology but the company has a vested interest from Michelin and when we see the commentary by Michelin it has an active target to use 40% recycled material in all its tyres by 2030 and rCB is key enabler in this transition which it sources from Scandinavian Enviro Systems AB. It is also collaborating with Bridgestone to standardize the technical requirements and build the supply chain necessary for increasing rCB content within the industry, supported by formal white papers and cross-industry guidelines. While current adoption in mass-market tyres is still below 5–10%, Michelin’s strategic intent is to dramatically scale usage of rCB.

Both these companies are backed by major tyre manufacturer like Michelin, Continental tyres, Schwalbe and BASF and are adopting JV or licensing model to expand their network across Europe with similar product profile, product quality and structure.

Financials and Structure

Metric Pyrum Scandinavian Enviro Infiniteria (est.)
Market Cap €109m (NOK 1.27bn) ~SEK 8–9bn (€850–950m est.) N/A (JV)
Business Model Direct plant operator + JV IP licensing IP/tech licensing + minority JV equity Plant operator (Antin owns majority infra)
2024–25 Revenue €2.0m (2024), €1.8m (9M 2025) ~€10–15m est. (Åsensbruk pilot + services) N/A
Current Profitability EBITDA €-5.9m EBITDA €-3 to -5m est. (pre-Uddevalla scale) N/A
Capacity (current) 30 TPD (TAD 1+2+3 Dillingen) 15 TPD (Åsensbruk) N/A
Capacity (planned) 40 TPD (2026, Dillingen + Perl-Besch); 100+TPD (European JVs) 35 TPD (Uddevalla phase 1); 1,000 TPD (Infiniteria by 2030) 1,000 TPD by 2030 (Antin backing)
Customer Base Continental, Schwalbe, BASF, Michelin/tyre OEMs Michelin (primary off taker + backer), Volvo, auto OEMs Michelin primary off taker
Valuation Multiples (TTM) P/S ~7.7x (€109m / €14.2m 12M revenue) P/S ~6–8x est. (€900m / €120m+ revenue est.) N/A
Profitability Timeline EBITDA breakeven 2026, net breakeven 2027 Similar (Uddevalla ramp 2025–26, profitability 2026–27) Profitability 2028–29 (later than others)

Data points for tech and capacity

Factor Pyrum Innovations AG Scandinavian Enviro Systems AB Hi-Green Carbon Ltd
Ownership Public, strategic industry Public, Michelin/Antin JV, tech licensing Promoter led, low FII/inst. base
Flagship Plant Dillingen/Saar, 22,000 tpa Uddevalla (under construction), 34,500 tpa Bhilwara, Dhule, Dhar (each 36,500 tpa)
Tech Patented thermolysis, self-sufficient, digital twin, REACH & ISCC Modular pyrolysis, strong IP, ISCC, tech licensing; proven auto-applications Indigenous continuous, SCADA; energy integration; Indian market fit
Output Quality Automotive-grade rCB (VDA 6.3+), long-term OEM offtake (Continental, Schwalbe, BASF) Michelin, Volvo; ISCC/93% CO2 reduction, rCB for commercial tyres Indian/Asian market, value prop in cost/CO2; less penetration in Euro/US premium tyres
Business Model Operate own, build SPVs with equity IP/licensing, milestones, JV with Antin/Michelin, service revenue Owner-operate, direct sales, energy-chemicals integration
Expansion Pan-European network via JVs Pan-European via Infiniteria JV, modular scale India-focused, multi-state rollout
Sustainability CO2 reduction >75%, REACH, ISCC, circular supply contracts ISCC, 93% CO2 reduction, closed-loop with Michelin ISO 14001/45001/9001; positioning as India’s “ESG” player

Amount Raised by this company’s till date in form of Debt and Equity.

Company Equity Raised* Debt Raised* Total Capital Raised (2021–2025) Capex Spent on Main Plant(s) Key Notes
Pyrum Innovations AG ~€60–70 million ~€35–40 million (BASF, banks) ~€100–110 million Dillingen + Perl-Besch: ~€95–110 million (est.) Capital includes IPO, multiple secondary raises, BASF strategic debt, plus EU/other grants. Perl-Besch greenfield alone budgeted at €60–70m. Dillingen site progressively expanded.
Scandinavian Enviro Systems AB ~SEK 900–950 million (~€85m) ~SEK 4–8 million (~€0.4–0.7m) ~€85–86 million Uddevalla 1 (first JV plant): SEK 750–1,100m (~€66–96m) Enviro mostly equity-funded via rights issues, milestone payments. Very low debt; Uddevalla budget SEK 750–1,100m across two phases by 2026. Most capex for Uddevalla is funded at JV level.
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I was studying the Hi green ltd for investment purpose and whatever I understood, I am writing here. I also took help of AI in this. I divide my analysis in 5 points .
1 key red flags
2 Management walk and talk
3 MOATS.
4 Risks or Threats
5 Why stock is falling despite of revenue growth.

1 Key red flags in Hi-Green Carbon

a) Credit rating: CARE D (default category)

  • As of 2 Sep 2025, CARE has the long‑term bank facilities at CARE D; Issuer Not Cooperating.
  • CARE explicitly mentions:
    • “delays in debt servicing recognized from publicly available information”.
    • Earlier (Mar 2025) also spoke of stretched liquidity, high utilisation of limits, negative CFO, and overdrawing of working capital for 1–2 days and penal interest.

b) Governance & related-party issues (Radhe group)

From the FY25 annual report and Nov 2025 H1 results announcement:

  • Heavy transactions with group entity Radhe Renewable Energy Development Pvt Ltd, where the Chairman is interested:
    • FY24: purchase of capital goods ~₹270+ crore from Radhe (annual report).
    • Hi-Green board has now approved a strategic business & asset realignment:
      • All Radhe intellectual property, proprietary technology & know‑how transferred to Hi-Green for ₹1.
      • Radhe’s factory land, building & machinery leased to Hi-Green for ₹1 lakh per month.
      • All future machinery for Hi-Green’s plants to be fabricated in that leased facility, cost‑to‑cost, and third‑party gasification/STP orders will be executed by Hi-Green; Radhe earns 1% commission.
  • The company explains the move as:
    • “to remove the doubts in the minds of minority shareholders that we are transferring profit to our parent company… to be more transparent” (H1FY26 concall).

Positives:

  • Structure clearly improves alignment (IP and capex profits move into listed co).
  • Transaction pricing looks very pro‑Hi-Green on paper (₹1 IP, ₹1 lakh rent).

Concerns:

  • The need for such a structure arises because earlier there was significant dependence on a related party (Radhe) with large value transactions.

    • Past machinery prices were truly arm’s‑length.
    • Future dealings (1% commission, leases, etc.) remain fair.

c) Audit & compliance observations

From FY25 annual report:

  • Cost records: Received a “show cause notice under Section 148” (non-compliance related to cost records).
  • Loans to subsidiaries:
    • Large, interest‑free loans to wholly‑owned subsidiary Shantol Recycling (₹124+ crore).
    • Statutory auditor notes non‑compliance with Sec 186(7) (no interest). Company’s reply: will recover interest at time of final repayment and “no financial impact since it is a wholly owned subsidiary.
      Audit trail not enabled in some financial systems for part of FY25.

d) Subsidiary performance & fire at Samsara

  • Consolidated H1FY26 numbers:
    • Standalone PAT = ₹6.63 cr
    • Consolidated PAT = ₹4.73 cr
      → Subsidiaries together lost ~₹1.9 cr in H1.
    • Auditors note sub‑companies have assets of ₹73.5 cr and net loss of ₹6.55 cr for the half year.
  • Fire at Samsara Recycling (Oct 2025) – wholly owned subsidiary that supplies crumb rubber:
    • Inventory (RM & FG) damaged; plant shut temporarily.
    • Insurance expected to cover most losses, but:
      • Adds uncertainty.
      • Shows operational risk in new value‑chain parts.
    • Management says they are using third‑party suppliers to maintain feedstock.

e) Liquidity & working capital

From CARE March 2025 and AR:

  • Operating cycle lengthened from 66 days to 103 days in FY24.
  • FY24 cash flow from operations negative at ~₹26 cr.
  • Working capital limits 75–80% utilised.
  • Company is expanding (Dhule commissioned, MP coming on stream), which:
    • Needs more inventory.
    • Adds fixed costs before full utilisation → near‑term strain.

Combine this with a CARE D rating, and lenders/investors will assume tight liquidity.

f) Margin pressure & volatility

  • Operating margin down:
    • FY24: ~25% PBILDT margin (CARE).
    • FY25 (AR MD&A): OPM ~15.4% vs 21.6% earlier.
    • H1FY26 standalone: ~13% EBIT margin, OPM ~15%.
  • Management on H1FY26 concall:
    • Price of TPO fell from ₹44–45/litre to ₹34–38/litre (₹10 drop in a year).
    • They carried high‑cost inventory and sold at lower prices.
    • Extra expenses (R&D for power from gas, rCB marketing, certifications like ISCC EU) depressed margins.
    • Overheads of under‑utilised new plants (Dhule rCB & syngas, MP plant pre‑revenue) sitting in P&L.

see a pattern: revenue growing, margins shrinking, and must believe management can stabilise margins as scale ramps up.

2 Management guidance vs delivery

What management has guided

From concalls (Jun 2025, Nov 2025) and AR:

  • Capacity & plants
    • Strategic goal: go from 100 TPD → 1,000 TPD by 2030 (10x).
    • Commitment to “one new plant of 100 TPD each year” (reiterated in Nov 2025 call).
    • Dhule (100 TPD) in Maharashtra commissioned Nov 2024.
    • MP plant (third 100 TPD):
      • 90–95% erection done; aiming for trial/commercial production in Jan 2026.
  • Revenue guidance
    • On Nov 2025 concall:
      • FY26: 38,000–40,000 MT waste tyre processing vs 24,000 MT in FY25.
      • Expect ₹130–140 cr revenue in FY26 (vs ~₹96–98 cr FY25).
      • Second half alone: ~₹80 cr turnover.
  • Margins
    • Target to bring OPM back to ~20% once:
      • Crude/TPO price pressure stabilises.
      • One‑off R&D & certification expenses normalise.
      • New plants (Dhule & MP) reach better utilisation.
  • rCB ramp‑up
    • rCB takes ~9–12 months per plant to reach 75–80% utilisation.
    • Maharashtra rCB at 30% utilisation in H1FY26.
    • Rajasthan rCB at 75–80%.
    • Aim to improve via OEM tire approvals, ATMA tie‑up, exports.

How have they delivered so far?

On expansion:

  • Dhule plant:
    • Originally planned May/Jun 2024; actually commissioned in Nov 2024 with cost overrun (project cost from ₹40.4 cr estimate to ₹49.1 cr – CARE note).
    • But by H1FY26:
      • Overall company capacity utilisation ~75–76%.
      • Dhule pyrolysis at 75% utilisation, rCB 30%, syngas ~0% (power plant still being set up).
  • MP plant:
    • Slower than originally envisaged in IPO roadmap, but seems now on last stages of erection.

So management has broadly delivered capacity, but:

  • With delays & cost overruns (they acknowledge this in AR).
  • Stabilisation and rCB ramp‑up are still ongoing.

On revenue:

  • FY24 TOI: ₹70.26 cr
  • FY25 TOI (AR / announcement 29 May 2025): about ₹96–98 cr (as disclosed in “Hi-Green doubles capacity” announcement).
  • H1FY26 consolidated revenue: ₹69.0 cr, vs H1FY25 ₹36.1 cr (per CARE & H1 results).

So on topline growth, management has met or exceeded broad growth commentary.

On margins:

  • Here execution is weaker:
    • FY23 PBILDT ~25.7%.
    • FY24 PBILDT ~25.5% but FY24 Op margin pressure already visible in cost structure; FY25 OPM down to mid‑teens.
    • H1FY26 consolidated EBITDA margin ~18–19%, PAT margin ~6.9%.
  • They had repeatedly aspired to maintain ~20% OPM; actual is 5–7 percentage points lower currently, with explanation largely around:
    • Commodity cycle (TPO prices), and
    • Under‑utilised new plants + R&D + marketing.

So:

  • Growth guidance: reasonably delivered.
  • Margin guidance: not yet delivered; some of it is macro, some execution.

3 Moats (strengths / competitive advantages)

From AR + concalls:

a) Technological & cost advantage: continuous pyrolysis

  • Hi-Green runs continuous pyrolysis plants (100 TPD) vs industry’s legacy batch‑type plants.
  • Management claims:
    • Much lower capex per TPD vs global peers; each 100 TPD plant at around ₹50 cr all‑in, which they say is “2–3x lower capex per unit capacity” vs foreign tech.
    • Energy integration:
      • Rajasthan: syngas converted to sodium silicate and internal energy; effectively zero external fuel.
      • Dhule: syngas → electricity via gas engines; target to cut grid power cost significantly.
  • CARE and AR both highlight this as a key differentiator.

This acts as a cost leadership moat, especially once the sector shifts from unorganised batch players to organised continuous players.

b) Integrated value chain & backward linkages

  • Main products from tyres: TPO, rCB, steel, syngas.
    • Syngas used for sodium silicate or power (Rajasthan vs Dhule).
  • Samsara Recycling (crumb rubber) acquired to:
    • Secure 20% (target 50%) of tyre feed requirement in‑house.
    • Located in Kachchh, near ports and tyre collection hubs.
  • Through Radhe integration:
    • Hi-Green now controls plant design, fabrication, and IP, not dependent on third‑party OEMs.

This improves:

  • Security of raw material.
  • Control over capex & technology.

c) Certifications & positioning with global customers

  • Environmental & quality certifications:
    • ISO 9001/14001/45001.
    • REACH registration for rCB.
    • ISCC+ and ISCC EU certifications (needed for EU exports, obtained/renewed recently).
    • Life Cycle Assessment and greenhouse gas (GHG) studies for rCB (announced Dec 2024).
  • Active discussions with:
    • ATMA (Association of Tire Manufacturers).
    • Major tyre OEMs for rCB as partial substitute to virgin carbon black.
  • Management emphasises building multiple end‑uses and multiple geographies for each product.

These build a reputation/approval moat, especially in a regulated, quality‑sensitive B2B space.

d) First mover + scale in India

  • Few Indian players with:
    • Large‑scale continuous pyrolysis lines.
    • Integrated rCB + TPO + syngas monetisation.
  • Management claims:
    • “We don’t see anyone right now in India who will be at this capacity” and say even globally only a few large European projects target 1 lakh+ MT; they are early in India.

If they execute 1,000 TPD target, they could become a scale leader with network advantage in sourcing scrap tyres and servicing large OEMs.

4 Key threats / risks (beyond red flags)

a) Commodity & margin risk

  • TPO competes with refinery fuels (LDO, furnace oil), whose prices follow crude cycles.
    • TPO price fell by ~₹10/litre over a year.
  • rCB competes with virgin carbon black, whose prices also fell as crude fell.
  • If crude stays weak and rCB adoption is slow, margins can remain structurally lower than what IPO investors underwrote.

b) Execution risk from aggressive expansion

  • Each 100 TPD plant is ₹50–60 cr including rCB & integration.
  • Roadmap: 3 plants by FY26, then 1 plant/year.
  • Risks:
    • More cost/time overruns like Dhule.
    • Under‑utilisation, especially rCB, can drag consolidated margins heavily.
    • Need sustained working capital for inventory and receivables.

With a CARE D rating and stretched WC, more capex means financing risk as well.

c) Regulatory & policy risks

  • Sector is heavily regulated by CPCB/SPCB/MoEFCC.
    • Batch‑type pyrolysis is being banned; good in long term but creates transitional supply disruptions.
    • Import of waste tyres is restricted; Hi-Green is seeking import licence, but approval is uncertain.
  • EPR (Extended Producer Responsibility) for tyres:
    • Framework still evolving; company is deliberately not booking EPR income at Hi-Green level to avoid double counting.
    • Management believes “EPR is not pure revenue in recycler’s pocket” and will mostly pass through to suppliers/customers.
  • Any tightening of norms, or adverse interpretation of EPR/permits, can hit operations.

d) Competition & overcapacity worry

  • Many new continuous pyrolysis projects announced (listed and unlisted).
  • Management argues added 400–500 TPD in organised space is small vs 12,000 TPD in unorganised batch reactors, and bans will force shift to organised players.
  • But if:
    • Unorganised units keep operating illegally,
    • Or too much organised capacity comes online too fast,

then realised prices for rCB and TPO can stay weak.

e) Subsidiary risk

  • Shantol Recycling and Green Valley Hydrocarbon are capex heavy & loss‑making at present.
  • Large interest‑free loans from parent concentrate financial risk at sub level.
  • Fire at Samsara showed operational and insurance realisation risk.

5 Why stock can fall from highs even while revenue is rising

Putting all of the above together, market has several reasons to derate the stock even as sales grow:

  1. Credit rating downgrade to CARE D (Sep 2025)
    * Public confirmation of debt servicing delays + non‑cooperation.
    * Investors fear: “If they struggle on bank lines now, how will they fund the aggressive 1‑plant‑per‑year plan?”
  2. Margin compression despite scale-up
    * Revenue grew sharply (₹70 cr → ~₹97 cr → run‑rate >₹130 cr), but:
    • OPM down from 20–25% levels to mid‑teens.
    • PAT not keeping pace; consolidated H1FY26 PAT ₹4.7 cr on ₹69 cr revenue (~7% margin).
* Market reprices from “high‑margin green tech” to more like a **cyclical processing company**.
  1. Governance and RPT perception
    * Large related‑party machinery deals and now the Radhe realignment (IP transfer for ₹1, token rent) raise question marks:
    • Were past years’ capex or profits optimally allocated?
    • Is future structuring stable and fully transparent?
* Any doubt on governance tends to bring **valuation multiples down**, even if fundamentals are improving.
  1. Risk events cluster
    * CARE D (Sep 2025).
    * Samsara fire (Oct 2025).
    * Radhe restructuring & H1 results (Nov 14, 2025) showing margin pressure + subs losses.
    * Resignation of Whole‑Time Director Nirmalkumar Sutaria (Nov 27, 2025).
    → Back‑to‑back risk headlines usually lead to sentiment damage and selling.
    . SME segment & prior exuberant valuations
    * Hi-Green is an SME‑listed stock (NSE Emerge). These often:

    • Run up sharply on narratives (green theme, 10x capacity plan).

    • Then correct hard when reality (execution difficulties, margin pressure, credit issues) emerges.

                                                               Disclaimer - Not invested but tracking for future investment
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This news from today’s Rajasthan Patrika. The company has not provided any disclosure regarding this, and the name “Hi Green” is not mentioned anywhere in this news article, but Hi Green does have a plant in Bhilwara, Rajasthan.

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क्वालिटी सूटिंग प्राइवेट लिमिटेड - its this co and Not Hi green

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