Ganesha Ecosphere Limited — Q3 FY26 earnings call

Call held 9 Feb 2026

Management summary

Ganesha Ecosphere reported a resilient Q3 FY26, with standalone business showing strong growth in volumes and margins, including a 5.24% QoQ revenue increase to ₹272.95 crore and EBITDA per ton improving to ₹5,962. Consolidated results, however, were impacted by regulatory uncertainty around PWM Rules, leading to a 23% revenue decline and 50% capacity underutilization in subsidiaries. The company secured new client wins and received government incentives, while navigating increased competition and US tariffs.

Highlights

  • Standalone business production volumes grew 13% QoQ to 29,088 MT.

  • Standalone sales volumes grew 7% QoQ to 31,107 tons, marking the highest in five years.

  • Standalone revenue increased 5.24% QoQ to ₹272.95 crore from ₹259.35 crore in Q2FY26.

  • Standalone EBITDA per ton significantly improved to ₹5,962 from ₹2,812 in Q2FY26.

  • Recycled Filament yarn successfully qualified with a leading global textile brand.

  • Became a regular supplier to the International Cricket Council (ICC) for World Cup tournaments.

  • Received ₹70 crores from the Telangana Government for the Warangal plant in January.

Concerns

  • Consolidated performance impacted by ongoing uncertainty surrounding the draft notification for PWM Rules.

  • Subsidiary businesses saw capacity utilization drop to 50% and revenues decline by 23%.

  • Higher US tariffs on Indian textile products impacting export opportunities.

  • Increased competition in the rPET industry due to more FSSAI-approved players and new capacities.

Key financials

  1. Consolidated Revenue ₹357.22 Cr
  2. Consolidated EBITDA ₹30.73 Cr +37.7%QoQ
  3. Consolidated EBITDA Margin 8.6%
  4. Consolidated PAT ₹4.74 Cr
  5. Consolidated Production Volume 38,768 tons
  6. Consolidated EBITDA per ton ₹7,638 +33.9%QoQ

What they filed

Q1 FY27: revenue up 25.8%, net profit up 163.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue387 398 344 337 363 −6%357 −10%424 +23%424 +26%
EBITDA55 57 51 36 22 −60%31 −46%52 +2%60 +67%
Net profit27 30 24 11 0 −100%5 −83%23 −4%29 +164%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue
₹357.22 Cr Total
  • Standalone Business ₹272.95 Cr 76.4%
  • Subsidiaries ₹84.27 Cr 23.6%

Capital allocation

high confidence
  • Capex Capex disclosed internal accruals, comfortable leverage position
    • Brownfield project for rPET in Warangal ₹130 Cr
    • Next leg of expansion (Greenfield/Brownfield) ₹450 Cr
    So, we are already implementing a brownfield project. The brownfield project could be operational by March and April. And so it involves a core CAPEX of around Rs. 130 crores, which has been largely incurred so far. For the next leg of expansion, Greenfield expansion or the Brownfield expansion, as per our plans, around Rs. 450 crores is to be invested in the next 2 years.
  • Liquidity Liquidity disclosed Received ₹70 crores from the Telangana Government for Warangal plant in January.
    Yes. So, we got the Rs. 70 crores from the government out of our outstanding incentives, about Rs. 110 crore from the Telangana Government for Warangal plant. The amount we have received in this January only.

Guidance & targets

Capacity

  • Subsidiary Capacity Utilization Capacity · Q4 FY26 · High confidence 70%-80%
    In the Q4 for this year, we are quite hopeful that the volumes will be better in Q4 than the Q3. We are expecting overall capacity utilization in between 70%-80% in Q4.

    — Gopal Agarwal

  • Warangal rPET Capacity Utilization Capacity · FY27 · High confidence 85%-90%
    So, for next year, basis the regulation is intact for 40%. We are expecting we would be able to utilize 85%-90% capacity utilization.

    — Gopal Agarwal

Regulatory Compliance

  • PWM Rules Mandatory Recycled Content Regulatory Compliance · FY27 · High confidence 40%
    So, FY '27 must be a good one and on the expected lines which we have thought for FY '26. But because of the chaos on the regulation side, it could not happen in this year. So, definitely, it could happen in FY '27 when the regulation would be for 40%.

    — Gopal Agarwal

Margin

  • Legacy Business EBITDA Margin Margin · FY27 · High confidence 9%-10%
    So, basically, our legacy business, we are expecting, we will come back to 9%-10% EBITDA margin next year.

    — Gopal Agarwal

Volume

  • Warangal rPET Volume Volume · FY27 · High confidence 55,000-60,000 tons
    And next year, we will be having around 70,000 tons capacity. And so we will be expecting a volume of around 55,000-60,000 tons and more than 60,000 ton.

    — Gopal Agarwal

Revenue

  • Warangal rPET Peak Revenue Potential Revenue · FY27 · High confidence ₹700-₹850 crores
    Yes. So, next year, we would be operating at about 70,000 tons capacity of rPET in Warangal. So, the peak revenue potential is about Rs. 700-Rs. 850 crores.

    — Gopal Agarwal

Profitability

  • Legacy Business EBITDA per ton Profitability · FY27 · High confidence ₹9,000-₹10,000
    And we are expecting in FY '27, we would be able to make the margins which we are earning earlier on our legacy business. It is in the range of around 9,000 tons to 10,000 tons EBITDA per ton.

    — Gopal Agarwal

Revenue Mix

  • rPET Revenue Share Revenue Mix · FY28 · Medium confidence 65%
    And we had expected 65% of our revenue coming from rPET by FY '28. That is also still intact, right? Yes. Once the offtake starts, definitely, we will move on our capacity expansion.

    — Gopal Agarwal

New Product Development

  • Polyolefins Recycling New Product Development · Future · Low confidence Exploring
    Yes, we are also starting the recycling of the Polyolefins apart from the PET. We are exploring that. As any complete plan is not yet, as of now, finalized, but definitely we are looking for it.

    — Gopal Agarwal

Exports

  • Export Vendors Exports · Future · Low confidence Get some vendors again
    Yes. So, we are already making some export around 9%-10% of our fiber volume which has been exported. And because of the tariff in the US, so we have started the export of some of our rPET but because of the tariff it was stopped, now we are expecting it will again, we can get some vendors.

    — Gopal Agarwal

What to watch in Q4 FY26

Finalization of PWM Rules notification

Next quarter
Current Draft notification pending, causing market uncertainty and delayed purchases.
Target Final notification issued, providing clarity for mandatory recycled content.

Why it matters

Crucial for rPET demand and market stability, directly impacting subsidiary performance and overall industry compliance.

Although much-awaited clarity on the draft notification would have benefited both the user industry and the recycling sector, its extraordinary delay has defeated the purpose. Even if the final notification is issued now, providing some relief in 30% norms for mandatory use of recycled content, the packaging industry will not be able to meet such lower targets within the remaining span of the current financial year.

Risks & concerns

  • Uncertainty and delay in finalization of PWM Rules draft notification

    high

    Ongoing uncertainty surrounding the draft notification for mandatory recycled content delayed integration of rPET and weakened demand, impacting subsidiary performance.

    Management acknowledged

  • Higher US tariffs on Indian textile products

    medium

    US tariffs of 50% on Indian textile products, implemented from September 2nd, 2025, prevented supplies to the US market.

    Management acknowledged

  • Increased competition and oversupply in rPET market

    medium

    The number of FSSAI-approved players and new capacities have significantly increased, leading to higher competition and supply exceeding demand, impacting realizations.

    Analyst acknowledged

Q&A highlights

8 direct
Increased competition in rPET due to FSSAI approvals and new capacities. Direct
So, yes, definitely the number of FSSAI-approved players has gone up quite significantly and there have been much newer capacities. Yes, certainly because of that there is obviously increased competition in the industry.

Highlights a key challenge for the rPET business, impacting pricing and demand due to market saturation.

Asked by Achal Mehta

Inability to sell to Europe and US despite approvals, given domestic demand issues. Direct
So, actually, the tariff is also applicable on our products as well. So, when the US tariff was implemented earlier in May, at that time PET polymer or rPET granules were in the exemption list, but on 2nd September when the new modification of the tariffs and the exemption list came out, the PET was excluded out of the exemption list. Since 2nd September, the tariffs are also applicable on our product. So, because of that, we have not been able to work out any supplies to the US market because of the tariff conditions of 50% reciprocal tariffs.

Explains why exports to key markets are not offsetting domestic demand issues, due to unexpected and high US tariff conditions.

Asked by Achal Mehta

PWMR implementation in FY27 and potential for roll-forward from FY26. Direct
So, unless the relaxation notification doesn't come, there is no carry forward. So, this year, 30% consumption was mandatory and whatever the shortfall is there, the penalty would be levied. Penalty is leviable. It depends. And for next year, it is 40% and the relaxation notification was proposed. Basis the recycling capacity was not there in the beginning of the FY '26. But now, the approved capacity is almost 250,000 ton to 300,000 ton in between. And so it meets the requirement of the user industry for the next year. So, we don't expect there would be any relaxation notification will come further for next year.

Clarifies that the 30% mandate for FY26 is firm with penalties, and FY27's 40% mandate is expected to proceed without further relaxation, which is crucial for rPET demand.

Asked by Dheeraj Ram

Legacy business EBITDA per ton and returning to FY25 levels. Direct
Yes. So, Bharatji, actually, this business was under distress since last 3-4 quarters, because of the reasons already explained in various concalls by us. So, now, this business has come back on the track. And so, the margins have started to improve. And we are expecting in FY '27, we would be able to make the margins which we are earning earlier on our legacy business. It is in the range of around 9,000 tons to 10,000 tons EBITDA per ton.

Provides specific margin targets for the legacy business, indicating a recovery and return to historical profitability levels.

Asked by Bharat Gulati

Realizations not improving despite PWM notification, and traction in Q3. Direct
So, you see, basically, if you look at the same, as Prashant had put in detail, the chronological order, what happened is that the regulation for 30% offtake is live. But in June, the government came out with a draft, giving some relaxation that you can carry because there is capacity shortfall to meet the target, you can carry forward to the next 3 years... So, everyone is awaiting and postponing their purchases for the final notification to come out, which is with the relaxation, basically. And because of that, everyone has been holding off to do their purchases since December... So, the realizations have not really improved any bit.

Explains the continued pressure on realizations in the rPET segment due to market uncertainty and delayed purchases by brands awaiting final notification on relaxation.

Asked by Bhavik Shah

Competition from Reliance Industries in PET recycling and Ganesha's strategy. Direct
So, basically, yes, the Reliance and Sri Chakra are collaborating. But the collaboration is regarding the RPSF, the traditional, the legacy business that we have, Recycled Polyester Staple Fiber business... And talking about competition, I think it is pretty clear that the Recycled PET industry has always been very competitive, I would say very highly competitive from the last 25 years, and it remains to be so. And Ganesha has still been able to navigate and has maintained its position as the leader of the industry in spite of the industry condition.

Addresses concerns about a major new entrant, clarifying their focus on RPSF (Ganesha's legacy business) and reiterating Ganesha's historical resilience in a competitive market.

Asked by Sibasish Padhy

Plans for chemical recycling or other plastics (HDPE). Direct
So, we are basically into mechanical recycling and as far as, only the mechanical recycling is is a proven one. Chemical recycling is at very nascent stage and its costing is too high, operational cost is too high, as well as the capex is also too high. So, it will take time to be commercially viable. ... Yes, we are also starting the recycling of the Polyolefins apart from the PET. We are exploring that. As any complete plan is not yet, as of now, finalized, but definitely we are looking for it.

Clarifies the company's current focus on mechanical recycling due to economic viability and its exploratory stage for polyolefins, indicating future diversification potential.

Asked by Sibasish Padhy

Demand vs capacity in rPET, considering new JVs like Indorama with Varun Beverages. Direct
Yes, definitely. So, see, it is not about shortfall of demand versus capacity. It is about managing the demand and supply. So, what is happening now in the industry is that we are working together to establish a very coherent demand supply situation for the industry to work in a better way, in a more efficient way. So, what is not going to happen is that in the last couple of quarters, no new capacities are coming up or are coming up to be announced in the future because the industry is waiting for the demand to firm up and the numbers to stabilize. So, even with the JV volumes which are coming in, we have already considered it in the current set of numbers. We will be almost at par with the demand and supply equation.

Addresses concerns about oversupply with new capacities, indicating that the industry is stabilizing and demand/supply will be balanced, including new JV volumes.

Asked by Dheeraj Ram

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Detailed narrative

Q3 FY26 Performance Overview (Standalone & Consolidated)

Ganesha Ecosphere's standalone business demonstrated resilience in Q3 FY26, with production volumes growing 13% QoQ to 29,088 MT and sales volumes up 7% QoQ to 31,107 tons, marking the highest in five years. Revenue from standalone operations increased 5.24% QoQ to ₹272.95 crore, with EBITDA per ton significantly improving to ₹5,962 from ₹2,812 in Q2FY26, and EBITDA margins reaching 6.79%. On a consolidated basis, revenue stood at ₹357.22 crore, with EBITDA of ₹30.73 crore (up 37.67% QoQ) and PAT of ₹4.74 crore, and consolidated EBITDA per ton climbing to ₹7,638.

Impact of Regulatory Uncertainty (PWM Rules)

Consolidated performance was significantly impacted by the ongoing uncertainty surrounding the draft notification from the Ministry of Environment, Forest and Climate Change regarding the mandatory use of recycled PET. This regulatory ambiguity delayed the integration of rPET into supply chains and weakened demand, leading to a 23% decline in subsidiary revenues and a capacity utilization drop to 50%. Management noted that while the 30% mandatory recycled content for FY26 is firm with penalties for non-compliance, the industry has been postponing purchases awaiting final clarity on potential relaxations.

Legacy Business Resilience and Diversification

The legacy business showed sustainable momentum, benefiting from stable raw material prices during the quarter. The company has actively diversified its portfolio, reducing dependency on the yarn spinning sector, with over 35% of quarterly sales volume generated from non-woven and home furnishing segments. Management expects the legacy business to achieve EBITDA margins of 9%-10% and EBITDA per ton of ₹9,000-₹10,000 in FY27, indicating a return to earlier profitability levels.

rPET Granules Business Challenges and Outlook

The rPET granules business faced challenges from increased competition due to more FSSAI-approved players and new capacities, coupled with the regulatory uncertainty. US tariffs of 50% on Indian textile products also prevented exports to the US market. Despite these headwinds, the company expects subsidiary capacity utilization to improve to 70%-80% in Q4 FY26 and anticipates 40% mandatory recycled content for FY27 will drive demand, targeting 85%-90% utilization and 55,000-60,000 tons volume for Warangal rPET, with peak revenue potential of ₹700-₹850 crores.

Capacity Expansion and Government Incentives

Ganesha Ecosphere is implementing a brownfield project with a capital outlay of ₹130 crores, expected to be operational by March/April, specifically for 22,500 tons of rPET in Warangal. Further expansion plans include an investment of ₹450 crores over the next two years for greenfield or brownfield projects. The company also received ₹70 crores in January from the Telangana Government as part of outstanding incentives for the Warangal plant, out of a total of ₹110 crores.

New Client Wins and Global Recognition

The company successfully qualified its recycled Filament yarn with a leading global textile brand, which is expected to improve margins and volumes for this segment, with 20%-30% capacity utilization anticipated from February. Ganesha Ecosphere has also become a regular supplier to the International Cricket Council (ICC), providing stadium-sized flags and unity flags made from recycled materials for World Cup tournaments, highlighting global recognition for its sustainable products.

Raw Material Stability and Inventory Management

Raw material prices remained relatively stable during the quarter, a contrast to previous high volatility, which supported margin improvement in the standalone business. The company manages raw material risk by maintaining an inventory of around 30-35 days, with plans to increase it by 4-5 days during the summer season when availability is superior. This strategy helps mitigate the impact of price fluctuations and ensures consistent supply.

Competitive Landscape and Future Strategy

Addressing concerns about new entrants like Reliance Industries in PET recycling, management clarified that Reliance's collaboration focuses on Recycled Polyester Staple Fiber (RPSF), Ganesha's legacy business, and that the PET recycling industry has always been highly competitive. Ganesha remains focused on mechanical recycling due to the high costs and nascent stage of chemical recycling. The company is also exploring the recycling of Polyolefins, indicating potential diversification beyond PET in the future.

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