These 2 Companies Are Creating Riches from Your Trash

Imagine you are out on a vacation to an offbeat destination in India - a village known for its scenic beauty and healthy air.

Suddenly, you see black smoke rising, with a burning smell filling your lungs. It can't be blocked with masks.

Now, that would be frustrating and infuriating, right?

While you can cut your trip short or shift station, this has become a daily reality for local people in such areas.

BBC recently came up with a scathing report on how UK is dumping its used tyres in India instead of recycling them. Millions of them are sent to Indian villages to be burnt in the absence of oxygen - a process called Pyrolysis. Reason - exporting and getting rid of it is cheaper than recycling it there.

The problem is that almost half of these factories are illegal, causing environmental and health hazards, including cancer.

Recently, an explosion in such unit claimed innocent lives. A few months ago, the state government in Karnataka had ordered closure of some such illegal units.

Waste is a real headache for governments and businesses, and a real crisis for environment and people.

But it doesn't have to be.

The interesting part is, with licenses and legal permissions, this waste can be treated sustainably and can even contribute to the circular economy.

Once a tyre approaches end of life, instead of getting dumped into landfills, it can be recycled for different applications. This also limits the need for virgin polymers, a plus for sustainability.

But how could an old used tyre possibly be used?

Well, you would be surprised.

For one, they can empower infra creation. Mixed with asphalt, the rubber in them can construct roads. They can even find their way back through auto rubber parts and new tyres.

And then there are rubber pipes using this discarded material for waste to wealth creation. Or slip resistant applications like conveyor belts. The steel in discarded tyres has its uses too in steel abrasives.

Coming to some direct consumer uses, they are used in playground mats, gym floors, sport turfs, and outdoor furniture.

In fact, there is more research going on for possible applications.

So, let's look at some listed Indian companies that are promoting this drive and generating wealth from waste.

The first is Tinna Rubber & Infrastructure Ltd (TRIL). It is one of Asia's largest recyclers of end-of-life tyres (ELT).

The tyres it recycles are used in road making, conveyor belts, rubber mats, gym tiles, rubber flooring, automotive parts, etc. The infra segment makes for over 50% of the revenue.

The company pioneered the concept of rubberised bitumen for roads and claims a 60% market share. It is also the largest supplier of microionized rubber powder to the tyre and conveyor belt industries in India.

The company is expanding capacities to cater to growing need and demand from end user industries.

It claims to be the world's only company to have the most diversified applications out of waste tyre recycling.

The business is global in nature with raw materials sourced from across the world and manufacturing plants in India and Oman.

Its clients include Reliance Industries, Delhi Metro Rail Corporation, PWD, Delhi Development Authority, ACC, DFC, UltraTech, tyre companies, and others.

The company is a registered producer and recycler with the Central Pollution Control Board. In fact, it has earned Rs 66 million from the sale of EPR credits (extended producer responsibility, that incentivises waste management) in FY24.

Let's now look at the waste to wealth part in numbers.

The business is offering return ratios of above 30% (FY24) with debt to equity well below 1 at present, and healthy double digit operating profit margins. It generates positive cash flow from operations.

The management has an aspiration to grow revenues to Rs 9 bn by 2027, an almost 2.5x growth.

The business is not without its risks though.

These include exposure to group entities through corporate guarantees, and inherent industry risks, exchange rate fluctuations, raw material and pricing risks, regulatory risks, and cyclicality in the end industries.

The stock is trading at a price to earnings growth PEG ratio of 0.46 and at a PE of 31.

Another listed company in this domain is GRP Ltd. It makes reclaimed rubber from used tyres, upscaled polyamide from nylon waste, and engineered products die-cut from end-of-life tyres.

It supplies to 8 of the top 10 tyre manufacturers globally. This core business comprises over 80% of the revenue. The rest comes from non-reclaim rubber business. It has availed EPR credits too.

Its return ratios are well above 30% for FY24 with a healthy balance sheet. The stock trades at a PE of 60 and PEG of 0.9.

Do note that no recommendation is implied in this article.

Every business has risks and needs due diligence when it comes to considering an investment. But given the structural growth prospects for the recycling theme, these two niche players deserve place on your watchlist.

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Warm regards,


Richa Agarwal
Editor and Research Analyst, Hidden Treasure
Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited) (Research Analyst)