3 Little Known Stocks Involved in the Futuristic Plastic Recycling Industry

By 2025, Nestle is committed to ensuring that all the plastic in its products is recyclable. L'Oreal is on a similar mission, promising that all its packaging will be "refillable, reusable, recyclable, or compostable" by then.

And by 2030, Procter & Gamble plans to cut its use of virgin plastic by half. To make these ambitious goals a reality, these companies, along with others, are backing a new wave of recycling technology-advanced or "chemical" recycling-that promises to recycle far more than traditional methods.

Why is chemical recycling the future? Mechanical recycling often falls short due to the degradation of plastic quality, whereas chemical recycling offers a scalable, long-term solution by enabling plastics to be endlessly recycled without losing their integrity.

This cutting-edge technology is still facing challenges in delivering on its promises. Despite this, the plastics industry is excited about its potential to solve the growing global waste problem.

In this article, we'll explore three lesser-known stocks that are playing a key role in the future of plastic recycling.

#1 ResGen

First on the list is ResGen.

ResGen is a pioneering company leading the way in the futuristic field of chemical plastic recycling, offering an innovative solution to the global challenge of plastic waste.

Unlike traditional mechanical recycling, which degrades the quality of plastics over time, ResGen employs a patented catalytic pyrolysis process to convert end-of-life plastics into PlasEco, a low-sulphur, high-calorie fuel.

This cutting-edge technology addresses the limitations of conventional recycling by breaking down plastics at the molecular level, producing high-quality outputs such as virgin-grade oil and fuels that can replace fossil fuels or refill the plastic feedstock.

ResGen's process is efficient, safe, and designed with zero machine downtime, ensuring that all by-products are reused, making it a sustainable approach to recycling.

ResGen's advanced process produces virgin-grade oil and fuels, addressing limitations in mechanical methods and offering a scalable solution to the plastic waste crisis.

This technology ensures that plastics can be continuously recycled without compromising their integrity.

At its state-of-the-art plant in Palghar, ResGen processes 11,000 tonnes of plastic waste annually, turning it into PlasEco.

ResGen's Financial Snapshot (FY23 & 24)

(Rs m, Consolidated)	FY23	FY24
Revenue Growth (%)	390.5	92.9
Net Profit Margin (%)	17.7	14.4
Return on Equity (%)	9.7	13.2
Return on Capital Employed (%)	14.2	19

Data Source: Equitymaster

For FY24, the company reported a 92.9% year-on-year (YoY) increase in revenue, reaching Rs 455 million (m). At the same time, net profit grew from Rs 42 m to Rs 66 m.

Going forward, the company plans to increase its market reach.

For more details, see the ResGen company fact sheet and quarterly results.

#2 Gravita

Next on the list is Gravita.

Gravita India Limited stands out as a futuristic plastic recycling company due to its comprehensive approach to sustainability and its commitment to the circular economy.

The company's ability to source plastic scrap from various parts of the world, including battery boxes, HD barrels, raffia bags, and LD films, ensures a steady supply of raw materials necessary for large-scale recycling.

Furthermore, Gravita employs advanced recycling techniques to process these plastic scraps into high-quality products. This focus on innovation enhances the efficiency of its recycling processes, ensuring that the products meet stringent industry standards.

The company also manufactures a wide range of recycled plastic granules, including polypropylene, polycarbonate, HDPE, and ABS, which serve as vital raw materials for manufacturers seeking sustainable alternatives to virgin plastics.

In addition to its recycling capabilities, Gravita offers turnkey solutions, providing comprehensive services such as plant design, equipment installation, and operational support.

The company also recycles aluminium, offering a wide range of eco-friendly products for industries like automotive, energy, and construction.

Gravita India's Financial Snapshot (FY20-24)

(Rs m, Consolidated)	FY20	FY21	FY22	FY23	FY24
Revenue Growth (%)	8.5	4.6	57.2	26.4	12.9
Net Profit Margin (%)	2.7	4	6.7	7.3	7.7
Return on Equity (%)	16.2	21.1	38.4	34.7	28.9
Return on Capital Employed (%)	29.2	31.8	40.8	39.9	30

Data Source: Equitymaster

On the financial front, from FY20 to FY24, the company achieved a CAGR growth of 20.6% in sales, while its net profit saw a growth by 65.7%.

Additionally, it has consistently maintained strong financial metrics, with an average RoE of 27.9% and a RoCE of 34.4%.

Looking ahead, Gravita is investing heavily in future growth avenues. The company's foray into lithium-ion battery recycling and tyre recycling is a strategic move to tap into emerging opportunities.

Additionally, the company has expansion plans for its rubber, paper, and steel recycling segments.

For more details, see the Gravita India company fact sheet and quarterly results.

#3 Gem Enviro Management

Last on the list is Gem Enviro Management.

Gem Enviro Management positions itself as a futuristic plastic recycling company by adopting innovative approaches to tackle the growing challenges of plastic waste.

Established in 2013, the company has emerged as a trailblazer in the industry, combining cutting-edge systems and processes, environmental stewardship, and a commitment to sustainability to create a more responsible and eco-friendly approach to plastics.

As a prominent provider of Extended Producer Responsibility (EPR) services, Gem Enviro collaborates with manufacturers, retailers, and brand owners to ensure efficient collection, segregation, and recycling of post-consumer plastic waste.

It has a pan-Indian presence with a vast network of waste collectors and recyclers, which has been instrumental in preventing over 1 million MT per year of recyclable plastic waste and more than 100,000 MT of multi-layered plastic (MLP) waste from polluting the environment.

By actively promoting a circular economy, Gem Enviro converts discarded plastics, such as PET bottles, into reusable products like fibers and granules, minimizing environmental impact.

The company has gained recognition for its deployment of reverse vending machines in urban areas, incentivizing consumers to participate in recycling and enhancing waste collection efficiency.

Partnerships with major brands like Coca-Cola, PepsiCo, and Bisleri underscore its operational strength and credibility in handling large-scale recycling projects.

In addition to its corporate collaborations, Gem Enviro engages the public through innovative campaigns such as bottle buy-back programs and awareness drives, fostering a culture of recycling.

Gem Enviro Management's Financial Snapshot (FY20-24)

(Rs m, Consolidated)	FY22	FY23	FY24
Revenue Growth (%)	28.6	29.7	(-21.1)
Net Profit Margin (%)	22.7	23.7	33.7
Return on Equity (%)	43.5	41.5	33.2
Return on Capital Employed (%)	58.8	55.8	44.9

Data Source: Equitymaster

On the financial front, from FY22 to FY24, the company achieved a CAGR growth of 9.6% in sales, while its net profit saw a growth by 24.6%.

Additionally, it has consistently maintained strong financial metrics, with an average RoE of 39.4% and a RoCE of 53.2%.

With India increasingly focusing on sustainable practices and stricter plastic waste management regulations, Gem Enviro Management is well-poised to capitalize on emerging opportunities.

For more details, see the Gem Enviro Management company fact sheet and quarterly results.

Conclusion

The India waste plastic recycling market is experiencing substantial growth, with the market size reaching 9.9 million (m) tons in 2023 and projected to grow to 23.7 m tons by 2032, reflecting a compound annual growth rate (CAGR) of 9.86% from 2024 to 2032.

Several factors are driving this growth, including the increasing use of recycled plastic in the packaging industry, a rising focus on sustainable living, and supportive government initiatives aimed at improving plastic waste recycling.

Notably, India became the first Asian country to launch a Plastics Pact in 2021, with ambitious targets to make 100% of plastic packaging reusable or recyclable and to effectively recycle 50% of plastic packaging by 2030.

Despite being one of the largest consumers of plastic, with consumption exceeding 16 million tons annually, India faces challenges in managing plastic waste.

Approximately 26,000 tons of plastic waste are generated daily, but only a small portion of this is recycled, with much of it ending up in landfills and water bodies, contributing to severe environmental damage and health risks.

In response, the Indian government has rolled out initiatives to enhance plastic waste management and promote sustainable recycling practices.

As the government continues to prioritize plastic waste management and recycling, companies operating in the plastic recycling sector stand to benefit significantly.

Nevertheless, it is always prudent to conduct thorough research before making any investment decisions. Ensure investment aligns with your financial objectives and matches your risk tolerance level.

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...