Ganesh ecosphere (Incorporated in 1987) is the largest player in india in Regenerated Polyster Staple Fibre( RPSF) with total installed capacity of 57600 TPA .
Investment Summary:
• PET recycling has got tremendous growth potential: With changing lifestyle and higher disposable income, Indian PET demand is expected to grow at 7.5% pa from current level.
• Capacity expansion will lead to growth in turnover: Because of enhanced capacity, Turnover in FY14E will grow to Rs 640 cr from Rs 199 cr in FY 10.
• Entry into value added segment will lead to margin expansion: Ganesh ecosphere is consciously undertaking forward integration to enter into value added segment. Ganesh ecosphere will be foraying into spinning of yarn and also they are setting up recycled POY( Partially oriented yarn) unit. Entry into value added segment will help Ganesh ecosphere enhance EBITDA margin significantly.
• Tax Break: Icing on the cake: Ganesh ecosphere enjoys significant tax break for its Rudrapur RPSF plant.The tax incentive availed for Rudrapur plant includes Nil Excise duty, Full exemption from income Tax for first 5 years and 30% exemption for subsequent 5 years, Sec 80I© and Concessional CST (1%) vis-à-vis normal rate of 2%.Thus effectively Ganesh ecosphere is paying MAT which further strengthens bottomline.
Valuations: At the current market price of Rs 76, as Ganesh ecosphere is in a very promising space of waste recycling and is expected to register very high growth rate going ahead, we are expecting ganesh ecosphere to post decent returns. Hence, we are giving target of 94 in this counter.
Investment Summary:
• PET recycling has got tremendous growth potential: With changing lifestyle and higher disposable income, Indian PET demand is expected to grow at 7.5% pa from current level.
• Capacity expansion will lead to growth in turnover: Because of enhanced capacity, Turnover in FY14E will grow to Rs 640 cr from Rs 199 cr in FY 10.
• Entry into value added segment will lead to margin expansion: Ganesh ecosphere is consciously undertaking forward integration to enter into value added segment. Ganesh ecosphere will be foraying into spinning of yarn and also they are setting up recycled POY( Partially oriented yarn) unit. Entry into value added segment will help Ganesh ecosphere enhance EBITDA margin significantly.
• Tax Break: Icing on the cake: Ganesh ecosphere enjoys significant tax break for its Rudrapur RPSF plant.The tax incentive availed for Rudrapur plant includes Nil Excise duty, Full exemption from income Tax for first 5 years and 30% exemption for subsequent 5 years, Sec 80I© and Concessional CST (1%) vis-à-vis normal rate of 2%.Thus effectively Ganesh ecosphere is paying MAT which further strengthens bottomline.
Valuations: At the current market price of Rs 76, as Ganesh ecosphere is in a very promising space of waste recycling and is expected to register very high growth rate going ahead, we are expecting ganesh ecosphere to post decent returns. Hence, we are giving target of 94 in this counter.
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