Top 5 Waste Management Stocks to Add to Your Watchlist

The problem of waste management is only getting bigger by the day.

India produces 62 million (m) tonnes of waste annually. Only 70% of it is collected, and 12 m tonnes is treated. 31 m tonnes end up in landfills.

Waste management and recycling companies play a crucial role in promoting environmental sustainability by efficiently managing and repurposing waste materials.

In recent years, these companies have garnered attention, driven by increasing urbanisation and environmental consciousness.

Waste-to-energy solutions and recycling activities have grown in popularity, helping to reduce environmental impact and conserve resources.

As governments worldwide tighten waste disposal restrictions, waste management companies are important in promoting appropriate and sustainable waste management.

Several companies are trying to develop innovative solutions for waste disposal, packaging alternatives, and recycling solutions.

Let's look at the top 5 companies listed in this segment.

Read on...

#1 Antony Waste Handling Cell Ltd (AWHCL)

AWHCL's primary goal is to support Indian municipal corporations in addressing municipal solid waste management.

The company actively contributes to the entire waste management supply chain.

It uses garbage compactors to facilitate efficient waste collection and transportation, ensuring proper containment and management of waste.

The company is also in the process of extracting biogas and generating electricity. It uses waste-to-energy initiatives to reduce reliance on fossil fuels, simultaneously reducing greenhouse gas emissions and promoting the principles of a circular economy.

It's one of the top five players in the Indian municipal waste management industry and 90% of Mumbai's waste is processed by the company.

Shares of AWHCL gained up to 11% on Tuesday last week and 35% in the next three days.

This after the finance minister Nirmala Sitharaman in her Budget 2024 speech said the government would promote water supply, sewage treatment, and solid waste management projects and services for 100 large cities.

In March 2024 the company's arm bagged an order worth Rs 770 m from the City and Industrial Development Corporation of Maharashtra Ltd (CIDCO) for processing of legacy waste through bio-mining.

The company recorded a 19% increase in operating revenue compared to the previous year, reaching Rs 7.6 billion (bn).

Total operating revenue, excluding contract revenue but including revenue from the sale of recyclables and refuse-derived fuel (RDF), stood at Rs 8.2 bn, a 21% year-over-year (YoY) growth.

This uptick is attributable to enhanced operational efficiency, driven by increases in tipping fees and revenue from fixed shifts, trips, and household fees.

Additional revenue growth was supported by contributions from the new collection and transportation (C&T) project in Panvel and the first full quarter of power sales from the Waste-to-Energy (WtE) project.

The company's earnings before earnings tax depreciation amortisation (EBITDA) stood at Rs 1.9 bn, effecting a 29% YoY growth, with a core EBITDA margin of 23%.

#2 Ganesha Ecosphere Ltd

Ganesha Ecosphere Ltd is a leading PET (polyethylene terephthalate) waste recycling company in India and is engaged in the manufacturing of recycled polyester staple fiber (RPSF), spun yarn, and dyed texturised yarn in India.

The company benefits through government policies such as approving B2B (business to business) recycling for food grade applications & mandatory regulations to use recycled PET from FY24.

The company received an order on 4 August 2023 from Moon Beverages Limited, for a supply of rPET chips. Moon Beverages is an authorised bottler of Coca-Cola.

Last year, the company launched its new brand Go Rewise. Go Rewise is dedicated to conserving resources and establishing sustainability by efficiently recycling PET plastic into premium quality products.

The company has announced a strategic investment of Rs 160 m in the equity share capital of RACE Eco Chain (RACE).

This investment is a part of the company's strategic investment to strengthen its raw material supply chain of PET waste.

Ganesha Ecosphere is eyeing revenues of around Rs 17-19 bn for FY25. The expansion in the bottle-to-bottle capacities will help it achieve a compound annual growth rate (CAGR) of around 20-22% over the next 3-4 years.

'The recent surge in its stock price and its positive performance indicators make it a company to watch out for.

#3 Gravita India

Established in 1992, Gravita India Ltd is one of the largest lead producers in India.

The company also has expertise in the recycling of used batteries, cable scrap/other lead scrap, aluminium scrap, and plastic scrap.

The company has a clientele of 350+ customers in Asia, the Middle East, Europe, and the Americas, spanning 32+ countries. It delivered 169,000 MT (metric tonne) of recycled products globally in FY24.

The company has an order book of 60,000+ MT as of April 2024.

In India, it caters to 240+ customers in 22 states. The company's main clients include names like Schneider Electric, Exide, Tata Batteries, KEC, Amara Raja, KEI, Prysman, and Panasonic.

By FY28, the company envisions 50%+ contribution from value-added products and 30%+ non-lead business revenue. The company wants to venture into new recycling verticals in rubber, lithium, steel, and paper.

The management has planned a capex of about Rs 6 bn by FY27 for capacity expansion by 500,000 MTPA (metrics tonne per annum).

Gravita India recorded its highest net sales in the last five quarters, amounting to Rs 8.6 bn.

The net profit for the quarter was at its highest in the last five quarters, at Rs 68.9 m. On the other hand, the company's non-operating income was 34.4% of the profit before tax (PBT).

This suggests that a significant portion of the company's income is coming from non-business activities. The non-operating income for the quarter was also at its highest in the last five quarters, amounting to Rs 248.9 m.

#4 Eco Recycling Ltd. (Ecoreco)

Ecoreco is a pioneer and leader in e-waste management. The company caters to MNCs, corporates, retailers, bulk consumers, OEMs, government departments, etc.

The company has established a new e-waste recycling facility with a capacity of 18,000 MT in Maharashtra.

The management is exploring opportunities in emerging markets to serve multinational corporations.

The increasing generation of e-waste, along with government policies, is expected to drive long-term demand for its services.

The existing plant's capacity utilisation is around 60%. The company expects to reach 75-80% utilisation in the coming quarters and further increase utilisation with the new facility.

Ecoreco currently produces black mass from lithium-ion batteries and is exploring partnerships for future chemical processing.

There wasn't a significant ramp-up in tonnage (quantity of materials recycled) in quarter four of FY24 because the company prioritised higher-margin items (electronic devices) over freezers and washing machines with lower profitability.

Around 10% of the business involved data destruction/recycling in the previous quarter. The company expects this to remain between 10-12% in the current quarter.

The company maintains a hopeful outlook for achieving 100% capacity utilisation by March 2026.

The 18,000-ton capacity addition is already set up and on track for 50% utilisation by March 2025 and close to 100% by March 2026.

During FY24, total revenues surged by 64%. Overall, net profit saw an impressive surge of 163%, showcasing the strength and resilience of the business.

Several factors have driven the company's success, including the growing importance of extended producer responsibility (EPR) obligations and increasing awareness of the need for e-waste recycling.

#5 Pondy Oxides Chemicals Ltd (POCL)

Incorporated in 1995, POCL's principal activities are converting lead scraps of various forms into lead metal and alloys.

The company carries out smelting of lead battery scrap to produce secondary lead metal which is further transformed into pure lead and specific lead alloys. The company also manufactures zinc metal and zinc oxide.

It's taking up greenfield and brownfield capacity expansion programs at an estimated investment of Rs 5.7 bn on favourable growth opportunities.

On 4 March 2024, the company acquired an industrial land parcel of 122.6 acres at Mundra, Gujarat, with a total investment of Rs 414 m.

Pondy Oxides recycles 140,000 tonnes of metal waste annually to produce lead and alloys.

Revenues for FY24 have shown a positive trend, with firm margins, improved operational performance, and a significant reduction in net debt.

Its growth is fuelled by capacity expansion, enhanced operational efficiencies, a solid balance sheet, experienced management, and strong stakeholder support, which augurs well for POCL's future.

Conclusion

Due to several major aspects, investing in waste management stocks in India is appealing.

Waste management is becoming increasingly important as India sees fast urbanisation and population expansion.

The government's quest for cleaner, more sustainable practices, and stricter environmental rules indicates that the sector is prepared for expansion.

Furthermore, increased environmental consciousness is boosting demand for environmentally friendly garbage solutions.

Investing in waste management stocks allows access to a booming business that offers financial opportunity and contributes to India's long-term growth.

However, it's important to do the necessary research and due diligence before investing in this sector.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...