Nikita Greentech Recycling LtdQ1 FY25Paper, Forest & Jute Products

Nikita Greentech Recycling Ltd

Q1 FY25 Earnings Call Analysis

Management growth scorecard

Revenue

Category 4

Margin

Category 2

Fundraise

Yes

Order

N/A

Capex

Yes

2 of 4 growth signals are positive.

Revenue guidance

Category 4

→FY26 is expected to see a modest industry growth reflected in the company's top line, projected around 7-8% growth.
→The 9 megawatt waste-to-energy power plant commissioning is anticipated to result in an exponential jump in growth and margin, especially evident from Q4 FY27.
→Current paper capacity utilization is around 82%, with plans to target at least 10% additional capacity utilization once power constraints ease.
→Focus will be on specialty grade paper, which has a higher CAGR (18-20%), enabling value addition and margin improvement.
→Expansion into the B2C segment is planned to improve realization and working capital cycle, but concrete plans are yet to be finalized.
→No immediate plans to increase paper capacity beyond 133,000 tons; growth will be driven by power plant installations and specialty segment expansion.

Category 2

→FY26 top-line growth is expected to be modest at around 7-8%, reflecting industry growth and the gestation period for the 9 MW waste-to-energy plant.
→FY27 is anticipated to show both top-line growth and cost reduction benefits, with the fourth quarter reflecting the impact of the new power plant.
→The 9 MW waste-to-energy plant will drive exponential growth post-installation, enhancing both revenue and operating margins by lowering energy costs.
→EBITDA margins on the paper segment currently stand at 13-14%, with improvement expected as specialty grades and B2C focus expand.
→EPR credits contribute additional revenue, projected to increase with higher capacity utilization and expansion.
→The company aims for sustainable long-term growth fueled by energy self-sufficiency, product portfolio expansion, and entry into B2C markets.
→Return on equity and ROCE stood strong at 22% and 12% respectively in FY25, indicating financial strength to support growth.

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Yes

→No immediate plans to raise new debt; current debt repayment schedules to continue naturally (Page 20).
→IPO proceeds (₹67.5 crores) primarily allocated for expansion, mainly the 9 MW waste-to-energy power plant (₹50 crores) and working capital (₹5 crores) (Pages 3, 18, 22).
→Discussion on potential strategic plans regarding unsecured loans from promoters but no definitive action yet; any conversion back to equity requires 75% free float, currently unachievable (Page 21).
→Management is still finalizing plans related to B2C segment expansion and any related funding will be communicated once concrete (Page 21).
→Overall, emphasis is on managing existing operations and expansion with current resources and IPO funds without external fundraising.

→For the corrugation grade paper (around 88-90% of production), orders are placed well in advance and production is mostly continuous based on these standing orders.
→Certain specific sizes are only produced after receiving confirmed orders due to machine constraints.
→For specialty grade paper, production is done by accumulating a minimum batch size from confirmed orders to meet customized quality and size requirements.
→Overall, production is largely order-backed, especially for specialty grades, while corrugation grades have a regular flow of orders supporting near-continuous manufacturing.

Yes

→Nikita Paper successfully raised ₹67.5 crore through IPO in May 2025.
→Approximately ₹50 crore from the IPO proceeds is allocated for setting up a 9 MW refuse-derived fuel (RDF) waste-to-energy power plant.
→The 9 MW plant aims for completion within 15 to 18 months, targeting 100% energy self-sufficiency and a full transition to green power.
→Existing 3.5 MW municipal waste-to-energy plant and 1.5 MW rooftop solar plant are operational.
→No immediate plans to increase paper production capacity beyond current 133,000 tons; focus is on specialty grade paper for value addition.
→Pre-IPO funds of ₹6 crore were used for working capital.
→Remaining IPO funds include ₹5 crore for working capital and the balance for general corporate purposes.
→Investments aim to improve energy efficiency, increase production capacity through renewable sources, and expand product portfolio including entry into B2C segment (plans under discussion).

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