Ganesha Ecosphe.

Ganesha Ecosphere delivered a robust Q2 FY25, with consolidated turnover reaching INR 386.8 crore, a significant 39% year-on-year increase. EBITDA surged to INR 55 crore, representing a 14.3% margin, up from 9.09% in Q2 FY24. PAT saw an impressive jump to INR 27.11 crore from INR 2.80 crore in the prior year. For the first half of FY25, operational revenue stood at INR 723.35 crore, with EBITDA of INR 102.97 crore and PAT of INR 49.65 crore, demonstrating strong growth across key financial metrics.

The company is proceeding with its major expansion in Odisha, establishing a new facility with an installed capacity of 45,000 tons for rPET granules. This project entails an estimated capital outlay of INR 450 crore, which will be operational in a single phase. Management expects production to commence by March 2026, with the full potential of the plant realized by FY28. The strategic location in Odisha aims to capture raw material from the region and benefit from logistics cost savings, with the company self-funding the expansion through existing liquidity and Warangal accruals.

The Warangal operations are showing strong progress, with rPET granules capacity utilization expected to ramp up to over 90% by March. RPSF capacity utilization is also targeted to reach 90% by March, and filament yarn capacity utilization is projected to hit 70-75% by March, then 80-85% thereafter. Management anticipates a quarterly revenue run rate of INR 160-175 crores from Warangal in Q4 FY25, growing to an annual revenue potential of INR 750-800 crores in FY26. The project currently operates at approximately 22% EBITDA margins, with expectations for further improvement.

To ensure sustainable raw material availability for its increasing requirements, Ganesha Ecosphere has made strategic investments and formed a Joint Venture with Race Eco. This JV will involve setting up smaller wash lines across India, with the first plant planned in Chennai, expected to start operations within a year. The strategy focuses on covering material locally within a 200-kilometer radius, aiming to optimize raw material sourcing rather than primarily reducing logistics costs.

The rPSF business continues to face headwinds due to over-capacity in the yarn segment, cheap fabric imports, subdued demand, and surging raw material prices. Despite these challenges, the company is mitigating impact through increased exports and a strategic shift from spun yarn to higher-value verticals like non-woven and stuffing. While passing on raw material price increases in rPSF remains an issue, continuous efforts are being made to improve product mix and focus on value-added offerings.

For FY25, Ganesha Ecosphere projects a consolidated top line of INR 1,500-1,600 crores with an EBITDA margin of 14.5%-15%. Long-term EBITDA margins are targeted at 16%-17%, with annual revenue growth of 25%-30% expected for the next couple of years. The company plans to fund its INR 450 crore Odisha expansion internally, supported by INR 110 crores from warrant conversion by May 2025 and an anticipated INR 30-40 crores in government subsidies for Warangal by Q4 FY25. Total capital employed for all projects, including working capital, is estimated at INR 550 crores, with a current average borrowing cost of 8.3%-8.5%.