Current/ Expected Orderbook/ Pending Orders?

For FY25 and FY26, the company is targeting utilization of 12,000 metric tons and 25,000 metric tons respectively. BK Soni indicated that they have visibility of orders in hand to achieve these targets. The volume guidance for Q4 is around 600 to 700 metric tons, with all expected volumes coming under the EPR (Extended Producer Responsibility) platform. Contracts with reputed brands related to EPR fees are in place, though exact durations and rates are undisclosed. Client additions continue with 9-10 new bulk corporate clients added in Q3 alone, supporting volume growth visibility. The company

Any current/future new fundraising through debt or equity?

Eco Recycling Limited has not taken any debt to fund its recent expansion. The company is financing its expansion entirely through internal accruals and liquid assets. So far, INR 35 crores have been invested from cash balance, with another INR 10-12 crores expected to be spent by June 2024. No external funding through debt or equity is currently planned or required. Future expansions (such as a potential third facility beyond FY '26) will be considered based on performance, but no mention of raising funds via debt or equity was made for those plans so far.

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

Eco Recycling Limited is currently expanding its capacity with a new facility of 18,000 metric tons. Total investment for this facility is envisaged to be around INR 45 to 50 crores. As of the call, approximately INR 35 crores has already been invested from internal accruals and liquid assets. Remaining investment of about INR 10 to 12 crores is expected to be completed by June, after the facility has already started operations. The company plans a third facility once it reaches 25,000 metric tons capacity, anticipated around mid-FY '25-'26. Future capital investments will depend on performanc

Future growth expectations in sales/revenue/volumes?

Target to scale volumes to 4,000 metric tons initially, progressing to 12,000 metric tons in FY25 and aiming for 25,000 metric tons by FY26. Expect to achieve around 600-700 metric tons volume in Q4 FY24, mainly under the EPR platform. Anticipate doubling revenue each year over the next 5-6 years, driven by increasing volumes and enhanced capacity utilization. Expansion plans include starting a third facility once achieving 25,000 metric tons capacity utilization. Growth driven by addition of large, multinational clients and increasing volumes from existing clients. Government mandates and EPR

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

Eco Recycling anticipates strong volume growth, targeting 12,000 metric tons in FY25 and 25,000 metric tons in FY26, with potential scaling beyond that depending on performance. Management expects to maintain minimum EBITDA margins of 40%, with current quarters achieving around 57-70%, indicating potential for sustainable high margins near 60%. Revenue is projected to increase significantly due to expanding Extended Producer Responsibility (EPR) fees, which will start contributing from Q4 FY24, with incremental volumes fully under the EPR platform. Asset turnover is strong, with an examp

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Eco Recycling LtdQ4 FY25Other Utilities

Eco Recycling Ltd Q4 FY25 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 1

Margin

Category 3

Fundraise

Order

N/A

Capex

Yes

2 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 1

→Target to scale volumes to 4,000 metric tons initially, progressing to 12,000 metric tons in FY25 and aiming for 25,000 metric tons by FY26.
→Expect to achieve around 600-700 metric tons volume in Q4 FY24, mainly under the EPR platform.
→Anticipate doubling revenue each year over the next 5-6 years, driven by increasing volumes and enhanced capacity utilization.
→Expansion plans include starting a third facility once achieving 25,000 metric tons capacity utilization.
→Growth driven by addition of large, multinational clients and increasing volumes from existing clients.
→Government mandates and EPR platform activation expected to accelerate revenue growth starting Q4 FY24.
→ASP expected around INR 130-140 per kg with EPR fees included, supporting higher revenue per ton processed.
→Organic funding planned for expansions using internal accruals and treasury income.

Margin guidance

Category 3

→Eco Recycling anticipates strong volume growth, targeting 12,000 metric tons in FY25 and 25,000 metric tons in FY26, with potential scaling beyond that depending on performance.
→Management expects to maintain minimum EBITDA margins of 40%, with current quarters achieving around 57-70%, indicating potential for sustainable high margins near 60%.
→Revenue is projected to increase significantly due to expanding Extended Producer Responsibility (EPR) fees, which will start contributing from Q4 FY24, with incremental volumes fully under the EPR platform.
→Asset turnover is strong, with an example of INR 50 crores investment yielding about INR 150 crores in sales (3x asset turnover).
→No additional external funding is anticipated for current expansions; internal accruals and liquid assets will fund growth.
→The company expects EBITDA and net profits to grow substantially, driven by volume growth, EPR fees, operational efficiencies, and increasing capacity utilization.

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Fundraise plans

→Eco Recycling Limited has not taken any debt to fund its recent expansion.
→The company is financing its expansion entirely through internal accruals and liquid assets.
→So far, INR 35 crores have been invested from cash balance, with another INR 10-12 crores expected to be spent by June 2024.
→No external funding through debt or equity is currently planned or required.
→Future expansions (such as a potential third facility beyond FY '26) will be considered based on performance, but no mention of raising funds via debt or equity was made for those plans so far.

Order book

→For FY25 and FY26, the company is targeting utilization of 12,000 metric tons and 25,000 metric tons respectively.
→BK Soni indicated that they have visibility of orders in hand to achieve these targets.
→The volume guidance for Q4 is around 600 to 700 metric tons, with all expected volumes coming under the EPR (Extended Producer Responsibility) platform.
→Contracts with reputed brands related to EPR fees are in place, though exact durations and rates are undisclosed.
→Client additions continue with 9-10 new bulk corporate clients added in Q3 alone, supporting volume growth visibility.
→The company maintains a policy to work only with fully compliant multinational clients, enhancing order quality and predictability.

Capex plans

Yes

→Eco Recycling Limited is currently expanding its capacity with a new facility of 18,000 metric tons.
→Total investment for this facility is envisaged to be around INR 45 to 50 crores.
→As of the call, approximately INR 35 crores has already been invested from internal accruals and liquid assets.
→Remaining investment of about INR 10 to 12 crores is expected to be completed by June, after the facility has already started operations.
→The company plans a third facility once it reaches 25,000 metric tons capacity, anticipated around mid-FY '25-'26.
→Future capital investments will depend on performance during FY '24-'25 and FY '25-'26.
→No external debt has been taken; expansions are fully funded from internal cash flows and treasury holdings.

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