Any current/future new fundraising through debt or equity?

No specific mention of any current or future fundraising through debt or equity was made in the provided transcript. The company has already invested significant amounts in capacity expansion (around Rs. 30 Crores spent with an additional Rs. 10-15 Crores planned by March 2024). The focus appears to be on capacity building and organic growth rather than external fundraising. There is no explicit reference to plans for raising funds via debt or equity in the discussed Q2 FY2024 conference call excerpts.

Any current/future capex/capital investment/strategic investment?

Eco Recycling Limited is investing in expanding its capacity by adding 18,000 metric tonnes, increasing total capacity to 25,200 metric tonnes. The capex for this capacity expansion is approximately Rs. 45 Crores, with Rs. 30 Crores already invested and another Rs. 10-15 Crores planned by March 2024. Investment includes setting up chemical recovery machinery for lithium-ion battery recycling, expected to be operational by January 2024. Current installed capacity for lithium-ion battery crushing is 10 metric tonnes per day (3,000 MT annually), with plans to install chemical recovery capacity of

Future growth expectations in sales/revenue/volumes?

Revenue for Q2 FY2024 grew by 75.3% YoY to Rs.10.08 Crores, with net profit margin close to 61%. Current capacity utilization is about 30%; target is 60%-70% utilization by March 2024 and potentially 100% thereafter. Capacity is being expanded from 7,200 MT to 25,200 MT by FY2024-25, expecting volumes to rise to about 15,000 MT (60% utilization). Industry CAGR is around 27%; Ecoreco aims to exceed this growth rate. Increasing business from extended producer responsibility (EPR) with five new producer contracts signed. Targeting Rs.100 Crores annual revenue at full capacity utilization. Confide

Future growth expectations in earnings/operating earnings/profits/EPS?

Company targets >27% CAGR growth, aiming to outperform industry average by March 2024 and beyond. Expansion plans include increasing capacity from 7,200 MT to 25,200 MT by FY2025, targeting 60-70% utilization by March 2024 and 100% thereafter. New capacity investment of approx. Rs. 45 Crores, with Rs. 10-15 Crores more expected by March 2024. EPR (Extended Producer Responsibility) business expected to significantly contribute to revenue and margins from Q3 FY2024 onwards. Current margins ~30% expected to be maintained or improved with rising EPR fees. Q2 FY2024 reported EBITDA margin improveme

Current/ Expected Orderbook/ Pending Orders?

Eco Recycling Limited is experiencing strong demand due to high producer obligations under Extended Producer Responsibility (EPR). The company has recently added five more producers to its client base, indicating a growing order book. There is a significant gap between installed recycling capacity (~0.5 million metric tonnes by renowned recyclers) and producer obligations (~1.6 million metric tonnes), leading to increased inquiries and orders. The market is expected to flood with orders as the need for recycling capacity grows; Eco Recycling and other players will receive more business. The co

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Eco Recycling LtdQ3 FY23Other Utilities

Eco Recycling Ltd Q3 FY23 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹433P/E: 39.0Market Cap: ₹902 CrSector: Other Utilities

Management growth scorecard

Revenue

Category 2

Margin

Category 1

Fundraise

N/A

Order

Yes

Capex

Yes

3 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 2

→Revenue for Q2 FY2024 grew by 75.3% YoY to Rs.10.08 Crores, with net profit margin close to 61%.
→Current capacity utilization is about 30%; target is 60%-70% utilization by March 2024 and potentially 100% thereafter.
→Capacity is being expanded from 7,200 MT to 25,200 MT by FY2024-25, expecting volumes to rise to about 15,000 MT (60% utilization).
→Industry CAGR is around 27%; Ecoreco aims to exceed this growth rate.
→Increasing business from extended producer responsibility (EPR) with five new producer contracts signed.
→Targeting Rs.100 Crores annual revenue at full capacity utilization.
→Confident of maintaining/improving margins due to quality service and premium pricing.
→Growth drivers include rising e-waste awareness, government EPR mandates, and expanded reverse logistics network.

Margin guidance

Category 1

→Company targets >27% CAGR growth, aiming to outperform industry average by March 2024 and beyond.
→Expansion plans include increasing capacity from 7,200 MT to 25,200 MT by FY2025, targeting 60-70% utilization by March 2024 and 100% thereafter.
→New capacity investment of approx. Rs. 45 Crores, with Rs. 10-15 Crores more expected by March 2024.
→EPR (Extended Producer Responsibility) business expected to significantly contribute to revenue and margins from Q3 FY2024 onwards.
→Current margins ~30% expected to be maintained or improved with rising EPR fees.
→Q2 FY2024 reported EBITDA margin improvement of 726 basis points; net profit margin ~61%.
→Robust revenue growth seen with Q2 FY2024 revenue up 75.3% YoY; net profit grew 78% YoY.
→Other income may normalize as reinvestment in projects grows.
→Management confident of sustained earnings and margin growth driven by increasing compliance demand and capacity utilization.

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Fundraise plans

→No specific mention of any current or future fundraising through debt or equity was made in the provided transcript.
→The company has already invested significant amounts in capacity expansion (around Rs. 30 Crores spent with an additional Rs. 10-15 Crores planned by March 2024).
→The focus appears to be on capacity building and organic growth rather than external fundraising.
→There is no explicit reference to plans for raising funds via debt or equity in the discussed Q2 FY2024 conference call excerpts.

Order book

Yes

→Eco Recycling Limited is experiencing strong demand due to high producer obligations under Extended Producer Responsibility (EPR).
→The company has recently added five more producers to its client base, indicating a growing order book.
→There is a significant gap between installed recycling capacity (~0.5 million metric tonnes by renowned recyclers) and producer obligations (~1.6 million metric tonnes), leading to increased inquiries and orders.
→The market is expected to flood with orders as the need for recycling capacity grows; Eco Recycling and other players will receive more business.
→The company is expanding capacity from 7,200 to 25,200 metric tonnes, aiming for 60-70% utilization by FY2025, supporting growth in order volume.
→Demand is expected to increase with government mandates and rising EPR compliance, ensuring a robust pipeline of pending and future orders.

Capex plans

Yes

→Eco Recycling Limited is investing in expanding its capacity by adding 18,000 metric tonnes, increasing total capacity to 25,200 metric tonnes.
→The capex for this capacity expansion is approximately Rs. 45 Crores, with Rs. 30 Crores already invested and another Rs. 10-15 Crores planned by March 2024.
→Investment includes setting up chemical recovery machinery for lithium-ion battery recycling, expected to be operational by January 2024.
→Current installed capacity for lithium-ion battery crushing is 10 metric tonnes per day (3,000 MT annually), with plans to install chemical recovery capacity of 12,000 MT initially.
→The company is focused on scaled growth and expects to reach 60%-70% capacity utilization by FY2025.
→Growth in capex is aligned with increasing Extended Producer Responsibility (EPR) demand and expanding service offerings.

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