Ganesha Ecosphere - Turning Waste Into Useful Resources

HAPPY INDEPENDENCE DAY TO ALL THE VIEWERS!!!!!

In his first Independence day speech, PM Narendra Modi said "Let us think about 0 defect - that our products are not defected and 0 effect - our products have no adverse effect on the environment". Our new pick is concentrating on the 2nd clause of that statement, by trying to reduce the environmental pollution with its innovations.

Ganesha Ecosphere is India’s largest waste recycling company (with 21% market share), primarily engaged in the recycling of Polyethylene Terephthalate (PET) bottles to produce Regenerated Polyester Staple Fiber.
It recycles more than 2 billion bottles annually and is one of the leading environmental friendly companies in India. The manufacturing plants are located at Kanpur and Rudrapur (Uttaranchal, India).
The company is having the most modern pet waste washing and recycling facilities, which ensure the recycling of waste in environment and people friendly manner. It is having all environmental clearances from concerned departments for its facilities.

How Does It Works?

Application Areas:

Details About Applications Of Products Manufactured By Ganesha Ecosphere:

http://www.ganeshaecosphere.com/applications.html

Recent Recongnizition:

The world’s biggest cola company – Coca Cola is recycling PET bottles waste into textile fibres in India, which in turn are turned into fashion items. Coca-Cola’s largest bottler in India, Hindustan Coca-Cola Beverages (HCCB), is demonstrating its commitment to sustainability by developing commercial solutions for recycling PET plastic. In collaboration with Ganesha Ecosphere Ltd. (GESL), the largest PET recycler in India, HCCB established the nation’s first bottle-to-fibre textile recycling operation.

The best thing about the company is that, their raw material itself is PET bottle waste. Nobody would deny that the use of PET bottle is going to increase in coming years. And with increasing use of PET bottles, the raw material will be easily available to the company. Hence the selection of a company, whose end product is linked to textile industry.

My Views:

I know I am once again, going with a company having higher debt, but there are some factors, which forces me to invest in a company. In case of Ganesha Ecosphere, the company looks very good fundamentally in all the parameters except the debt levels. As I said earlier also, if the company is involved in a strong business, with good growth and promising balance sheet, I won't reject the company just on the basis of high debts. Because of that, I know, the appreciation might be less or delayed, but other factors are too attractive for me not to invest in it. Being a long term investor, I won't mind if the stock price appreciation is less or gets slightly delayed. As far as I believe, if management is efficient, these things will get back on track, as the company grows in size.

Looking at numbers, the company is growing at a CAGR of 20% in sales and 22% in profit, in last 5 years, which is pretty decent. To add to that, because of recent collabrations with some of the top companies, the sales are bound to increase in coming years, at a stronger pace. The recent Q1 results proves exactly that, with a sales growth of 65% and net profit growth of 14% yoy. The net profit growth was sub-dued when compared to sales growth, but that was on account of almost double finance cost this year.

Currently, based on FY'14 numbers, the stock is trading at a P/E multiple of 6, which leaves plenty of scope for appreciation in future. As I said earlier, the stock might move slowly, but patience will pay in the long run, because I feel, the business they are involved in is great, and is expected to grow at a healthy pace, with companies looking forward to save the nature.

This stock is operating under a new sort of segment, hence difficult to give targets on it. And because of that same reason, I would suggest everyone to perform their own detailed study before investing in the company. As always, any investment you make, should be based on your belief and not only on someone else's thinking.