Ganesha Ecosphere Limited — Q4 FY25 earnings call

Call held 27 May 2025

Management summary

Ganesha Ecosphere Limited reported a strong FY25, achieving record consolidated revenue of ₹1,465.54 crores and PAT of ₹103 crores, driven by improved EBITDA margins and increased production. However, Q4 FY25 saw a sequential decline in revenue and PAT, primarily due to soaring scrap bottle prices and muted demand in the legacy business. The company is optimistic about the long-term outlook, with Warangal operations stabilizing and strategic expansions underway, despite short-term market volatility and the price gap between virgin and recycled PET.

Highlights

  • FY25 consolidated revenue reached ₹1,465.54 crores, marking a 30.5% YoY growth.

  • FY25 consolidated PAT stood at ₹103 crores, a significant 154% YoY increase.

  • EBITDA margins for FY25 improved to 14.4% from 12.3% in FY24.

  • Consolidated production volume for FY25 surpassed 1.5 lakh metric tonnes, reaching 156,087 tonnes, up 20% YoY.

  • Q4 FY25 consolidated revenue was ₹344.37 crores, a 13% QoQ decline.

  • Q4 FY25 consolidated PAT was ₹23.76 crores, down 20% QoQ.

  • Warangal plant operations have stabilized, with rPET granules performing excellently and new customers added.

  • Legacy business faced challenges in Q4 due to higher input prices and suppressed demand.

Concerns

  • Higher input prices (scrap bottles) and suppressed demand in legacy business

  • High volatility and soaring prices of scrap bottles due to exports of PET flakes

  • Rising gap between virgin PET and rPET polymer prices

Key financials

2 periods

Headline

  • Consolidated Revenue
    ₹1,465.54 Cr
    YoY +30.5%
  • Consolidated PAT
    ₹103 Cr
    YoY +154%
  • Consolidated EBITDA Margin
    14.4%
  • Consolidated Production
    1,56,087 tonnes
    YoY +20%

Q4

  • Consolidated Revenue
    ₹344.37 Cr
    YoY +13% QoQ -13%
  • Consolidated PAT
    ₹23.76 Cr
    YoY +10% QoQ -20%

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.

Guidance & targets

Revenue

  • Consolidated Turnover Revenue · FY26 · Medium confidence ₹1,700-1,750 crores

    Previously ₹1,800-1,900 crores → ₹1,700-1,750 crores

    So, for FY '26, we are looking at the turnover of about Rs. 1,700 crores to Rs. 1,750 crores.

    — Gopal Agarwal

  • Consolidated Turnover Revenue · FY27-FY28 · High confidence ₹2,600-2,700 crores
    So, after this expansion we are expecting our turnover in the range of about Rs. 2,600 crores to Rs. 2,700 crores.

    — Gopal Agarwal

Profitability

  • Standalone EBITDA Margin Profitability · FY26 · Medium confidence 10-11%
    And going forward, we would be able to maintain the EBITDA of 10% to 11% this year earnings in this business.

    — Gopal Agarwal

  • Consolidated Subsidiary EBITDA Margin Profitability · Ongoing · High confidence 21-22%
    So for consolidated business, yes, for consolidated business we are talking about subsidiary business, subsidiary business we are earning EBITDA margins in the range of 21% to 22%, which we expect to be continued.

    — Gopal Agarwal

Volume

  • Value-added products contribution to sales Volume · Next two years · Medium confidence 55-60%

    From 40% today

    So, we are operating at around 40%, for the value-added products and the normal product mix in our standalone business, and we are continuously trying to increase this share. So, we are expecting it to be 55% to 60% over the next two years' time.

    — Gopal Agarwal

Working Capital

  • Inventory Days Working Capital · Next 1.5 years · Medium confidence 70-75 days

    From 100 days today

    So we are looking for reducing it to by about 70, 75 days. Yes. Next one and a half years.

    — Gopal Agarwal

Capacity Utilization

  • Warangal Existing Capacity Utilization Capacity Utilization · Q3-Q4 FY26 · High confidence Optimal utilization
    Yes, so for existing capacity of Warangal, we are expecting to be optimal utilization by Q3, Q4 of this year.

    — Gopal Agarwal

  • Filament Yarn Utilization Capacity Utilization · End of FY26 · Medium confidence 70-80%
    but we think that by the end of this year we should be able to reach between 70% to 80% of utilizations in this filament yarn as well.

    — Yash Sharma

  • Overall Warangal Facility Utilization Capacity Utilization · End of FY26 · Medium confidence North of 75%
    So I think by the end of this year, we should be looking at overall utilization level north of 75% on the overall facility levels.

    — Yash Sharma

Capacity Expansion

  • New Additional Capacity (Warangal) Capacity Expansion · December 2025 · High confidence Operational
    We are expecting it to be operational by December, yes.

    — Gopal Agarwal

Capex

  • Additional Depreciation from Expansion Capex · Coming years · High confidence ₹35-40 crores
    So, from the expansion side, our additional depreciation would be in the tune of Rs. 35 crores to Rs. 40 crores.

    — Gopal Agarwal

Risks & concerns

  • Higher input prices (scrap bottles) and suppressed demand in legacy business

    high

    Legacy business facing heat due to higher input prices and suppressed demand from user industry, particularly in Q4.

    Management acknowledged

  • High volatility and soaring prices of scrap bottles due to exports of PET flakes

    high

    Scrap bottle prices soared to an all-time high in March '25 due to higher exports of PET flakes, impacting input costs.

    Management acknowledged

  • Rising gap between virgin PET and rPET polymer prices

    high

    The widening price gap makes customers less comfortable with rPET, impacting demand, though prices have started to stabilize.

    Management acknowledged

  • Uncertainties from USA tariffs

    medium

    The stand of USA on tariffs is creating uncertainties, though the company's export contribution is only about 9%.

    Management acknowledged

  • Potential oversupply in rPET segment due to new capacities

    medium

    Management believes actual output is lower than rated capacity and high-quality rPET production is technically challenging, limiting effective competition.

    Analyst downplayed

Q&A highlights

3 direct
Sequential decline in sales volume and reasons Direct
Yes. So, both the factors are there, one is the increase in the prices of input. So, that made the buyers to wait and to buy the material on a need basis only. And another way, we are also focusing on reducing our receivables number rather than pushing on the sales.

Reveals the dual impact of rising input costs and a strategic decision to manage receivables over pushing sales, explaining the Q4 volume dip.

Asked by Parth Agrawal

Industry capacity expansion for rPET and potential oversupply Direct
The final output usually is much lesser, approximately 20% to 25% lesser than the rated capacities. What usually people do is that they disclose their rated capacities rather than disclosing actual volumes like we do. That's the number one factor. Number two is that we think that not everyone will be able to manufacture very high quality rPET production because rPET, as we have understood, is a very highly technical product.

Management clarifies that reported industry capacities often overstate actual output and that quality is a significant barrier to entry, mitigating concerns about oversupply.

Asked by Dolly Choudhary

Impact of EPR mandates on rPET demand and the price gap between virgin PET and rPET Direct
Absolutely sir, your understanding is fully correct. The current government stands as per the regulation implementation; it has to be implemented as is. And they are very strict about it, so to speak. So, even though the industry is trying to defend, but still they are saying that the regulation has to be implemented.

Confirms the government's strict stance on EPR implementation, suggesting that brands will eventually have to comply, which should drive rPET demand despite current price differentials.

Asked by Sabyasachi Mukerji

2 min read 6 chapters

Detailed narrative

FY25 Performance Highlights and Q4 Challenges

Ganesha Ecosphere Limited achieved significant milestones in FY25, crossing ₹200 crores in EBITDA and ₹100 crores in PAT for the first time. Consolidated revenue grew by 30.5% YoY to ₹1,465.54 crores, with PAT soaring 154% to ₹103 crores. EBITDA margins expanded to 14.4% from 12.3% in FY24. However, Q4 FY25 saw a sequential decline, with consolidated revenue at ₹344.37 crores (down 13% QoQ) and PAT at ₹23.76 crores (down 20% QoQ), attributed to higher input prices and suppressed demand in the legacy business.

Warangal Operations and Expansion Progress

Operations at the Warangal plant have stabilized, with food-grade rPET granules demonstrating excellent performance. The existing Warangal capacity is expected to reach optimal utilization by Q3-Q4 FY26. The company is setting up new additional capacity at Warangal, which is anticipated to be operational by December 2025. This expansion is a key driver for future growth, with an estimated additional depreciation of ₹35-40 crores in coming years.

Outlook on rPET Demand and EPR Mandates

The long-term business outlook for the recycling sector remains intact, supported by the implementation of plastic waste management rules requiring 30% recycling. While the price gap between virgin PET and rPET has widened, management expects it to narrow. The government's strict stance on EPR mandates is expected to drive increased rPET usage by brands, despite some initial hesitation and a slight reduction in offtake volumes from existing customers due to price differentials.

Raw Material Sourcing and Backward Integration

The company is actively working on backward integration to secure raw material supply and reduce costs. Two washing lines are being set up in South India (Tiruchirappalli and Chennai) to collect material locally within a 250-300 km radius. This strategy aims to reduce transportation costs by eliminating the need to transport 23-24% of waste, thereby improving reliability and security of raw material for future expansions rather than directly impacting margins.

Financial Guidance and Strategic Focus

For FY26, the company projects consolidated turnover between ₹1,700-1,750 crores, a revision from previous guidance. Post-expansion, turnover is expected to reach ₹2,600-2,700 crores by FY27-FY28. Standalone EBITDA margins are targeted to be maintained at 10-11% for FY26, while subsidiary EBITDA margins are expected to continue in the 21-22% range. The company aims to increase the contribution of value-added products to 55-60% of sales over the next two years and reduce inventory days from 100 to 70-75 days within 1.5 years.

Market Dynamics and Export Strategy

The legacy business is expected to face challenges for the next two to three quarters due to high input prices and suppressed demand. However, the company is developing newer value-added products and exploring new markets. Exports currently contribute about 9% to consolidated revenue, and the company is actively working to increase its capacity exposure to the export market, particularly given demand for rPET in the EU and US markets, where rPET chips are exempted from tariffs.

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