GANECOS - Ganesha Ecosphe.

📊 NSE: GANECOS 🏢 Textiles - Processing 📅 Last Updated: 12/13/2025 22:17

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue grew 30.4% YoY to INR 1,483.48 Cr in FY25. In Q2 FY26, legacy business revenue grew 17.1% YoY, while subsidiary revenue declined by 10% due to regulatory delays and inventory costs.

Profitability Margins

Gross profit margins declined to 31% in Q2 FY26 from 35.4% in the previous quarter. Standalone Net Profit Margin for FY25 was 7.67% compared to 6.41% in FY24, driven by lower finance costs which fell 68.49% YoY.

EBITDA Margin

Consolidated EBITDA margin for FY25 was 14.19% (INR 210.58 Cr), a 53% growth in absolute EBITDA. Standalone EBITDA margin was 9.71% in FY25, down from 10.23% in FY24. Management expects legacy EBITDA margins of 7-9% in Q3 FY26, potentially exceeding 10% by Q4 FY26.

Capital Expenditure

Gross fixed assets (including CWIP) stood at INR 541.29 Cr as of March 2025, a 4.49% increase. Debt is expected to increase through FY2027 to fund ongoing capacity expansions in subsidiaries.

Credit Rating & Borrowing

Long-term bank facilities upgraded to CARE A+ (Stable) from CARE A; Short-term facilities upgraded to CARE A1+ from CARE A1 in January 2025. Subsidiary GEPL is rated [ICRA]A- (Stable).

⚙️ Operational Drivers

Raw Materials

PET bottle scrap (primary raw material) and bottle-to-bottle grade scrap.

Capacity Expansion

Recycled PET (rPET) granules capacity utilization reached 70-75% in 9M FY2025. Management plans steady debt increases through FY2027 to support capacity ramp-ups in GEPL and GETPL.

Raw Material Costs

Raw material costs represented 61.5% of standalone revenue in Q2 FY26 (INR 159.74 Cr). A sudden and steep hike in bottle scrap prices during the June quarter led to inventory losses and margin compression in Q2 FY26.

Manufacturing Efficiency

Consolidated production volume rose 7.8% YoY in Q2 FY26. Standalone sales volume reached 39,132 MT, a 16.3% increase, indicating high asset turnover despite margin pressure.

📈 Strategic Growth

Expected Growth Rate

30.40%

Growth Strategy

Growth is driven by the transition from legacy Recycled Polyester Staple Fibre (RPSF) to high-margin rPET granules for food and beverage packaging. The company is targeting renowned brands like Coca-Cola and Pepsi and expects a revival in Q4 FY26 following the implementation of the MoEFCC mandate.

Products & Services

Recycled Polyester Staple Fibre (RPSF), rPET granules (food-grade), recycled yarn, and textile-grade recycled chips.

Brand Portfolio

Ganesha Ecosphere, Ganesha Ecopet (GEPL), Ganesha Ecotech (GETPL).

New Products/Services

Food-grade rPET granules for the packaging industry, which contributed 53% of consolidated operating profit in 9M FY2025.

Market Expansion

Expansion into the food and beverage, textile, and packaging industries through subsidiaries GEPL and GETPL.

🌍 External Factors

Industry Trends

The industry is shifting toward mandatory recycled content in packaging. While current growth is stalled by procedural delays at MoEFCC, the long-term outlook is positive as FMCG brands (Pepsi, Coke, Ikea) commit to sustainability goals.

Competitive Landscape

Peers are facing similar challenges regarding regulatory delays and scrap price volatility, leading to industry-wide margin pressure in FY26.

Competitive Moat

The moat is built on early-mover advantage in food-grade recycling technology and established supply chains for bottle scrap collection. Management's experience in successfully commissioning similar capacities provides a competitive edge in project execution.

Macro Economic Sensitivity

Highly sensitive to government environmental policies and plastic waste management rules, which dictate the mandatory usage of recycled materials.

Consumer Behavior

Increasing consumer and brand preference for eco-friendly and sustainable packaging is driving demand for rPET over virgin plastic.

Geopolitical Risks

Global scenarios and volatility in international plastic prices affect domestic scrap pricing and competitiveness.

⚖️ Regulatory & Governance

Industry Regulations

The Plastic Waste Management Rules and MoEFCC mandates for recycled content are critical; procedural delays in these notifications have caused a temporary revenue decline in the subsidiary segment.

Environmental Compliance

The company is subject to MoEFCC, FSSAI, and BIS regulations. Compliance is managed through a robust policy framework to prevent non-compliance and promote governance.

Taxation Policy Impact

Standalone tax expense for H1 FY26 was INR 5.23 Cr on a PBT of INR 20.71 Cr, representing an effective tax rate of approximately 25.2%.

⚠️ Risk Analysis

Key Uncertainties

Regulatory delay in MoEFCC mandate (high impact on rPET volume), volatility in PET scrap prices (impacts margins by 4-5%), and project execution risks for ongoing capacity expansions.