Top 5 Waste Management Stocks for a Sustainable Investment Portfolio

The challenge of managing waste is escalating globally.

India alone generates 62 million tonnes of waste annually. Of this, only 70% is collected, and a mere 12 million tonnes are treated, while 31 million tonnes are relegated to landfills.

Companies specializing in waste management and recycling are pivotal in fostering environmental sustainability by efficiently handling and repurposing waste.

In recent years, the sector has seen a surge in interest due to urbanization and increased environmental awareness.

Waste-to-energy solutions and recycling initiatives have gained traction, helping to mitigate environmental impact and conserve resources.

With governments worldwide tightening regulations on waste disposal, waste management companies play a crucial role in promoting sustainable waste management practices.

Several companies are innovating in waste disposal, packaging alternatives, and recycling solutions.

Let’s examine the top 5 companies in this field.

1. Antony Waste Handling Cell Ltd (AWHCL)

AWHCL aims to assist Indian municipal corporations in managing municipal solid waste.

The company actively contributes across the entire waste management supply chain.

It uses garbage compactors to ensure efficient waste collection and transportation, facilitating proper containment and management of waste.

AWHCL is also engaged in extracting biogas and generating electricity through waste-to-energy initiatives, reducing dependence on fossil fuels, lowering greenhouse gas emissions, and promoting a circular economy.

AWHCL processes 90% of Mumbai’s waste, making it a leading player in India’s municipal waste management industry.

Recently, AWHCL shares surged by 35% over three days following the finance minister’s announcement to support waste management projects in 100 large cities in the 2024 Budget.

In March 2024, the company secured a contract worth Rs 770 million from the City and Industrial Development Corporation of Maharashtra Ltd (CIDCO) for processing legacy waste via bio-mining.

The company recorded a 19% increase in operating revenue, reaching Rs 7.6 billion, with total operating revenue, including the sale of recyclables and refuse-derived fuel (RDF), standing at Rs 8.2 billion, a 21% year-over-year growth.

This growth is attributed to increased operational efficiency, higher tipping fees, and revenue from fixed shifts, trips, and household fees. New collection and transportation projects and power sales from the Waste-to-Energy (WtE) project also contributed to the revenue growth.

AWHCL’s EBITDA reached Rs 1.9 billion, marking a 29% year-over-year growth, with a core EBITDA margin of 23%.

2. Ganesha Ecosphere Ltd

Ganesha Ecosphere Ltd is a leading PET (polyethylene terephthalate) waste recycling company in India, manufacturing recycled polyester staple fiber (RPSF), spun yarn, and dyed texturized yarn.

The company benefits from government policies such as B2B (business-to-business) recycling approval for food-grade applications and mandatory use of recycled PET from FY24.

On 4 August 2023, Ganesha Ecosphere received an order from Moon Beverages Limited, an authorized Coca-Cola bottler, for the supply of rPET chips.

Last year, the company launched the Go Rewise brand, focused on resource conservation and sustainability by efficiently recycling PET plastic into high-quality products.

The company has announced a strategic investment of Rs 160 million in RACE Eco Chain to strengthen its raw material supply chain of PET waste.

Ganesha Ecosphere is targeting revenues of Rs 17-19 billion for FY25, aiming for a compound annual growth rate (CAGR) of 20-22% over the next 3-4 years, driven by expansion in bottle-to-bottle capacities.

The recent surge in stock price and strong performance indicators make Ganesha Ecosphere a noteworthy company.

3. Gravita India Ltd

Founded in 1992, Gravita India Ltd is one of India’s largest lead producers and specializes in recycling used batteries, cable scrap, other lead scrap, aluminum scrap, and plastic scrap.

With over 350 customers across Asia, the Middle East, Europe, and the Americas, the company delivered 169,000 MT (metric tonnes) of recycled products globally in FY24.

Gravita India has an order book of over 60,000 MT as of April 2024, serving 240+ customers in 22 Indian states, including major clients like Schneider Electric, Exide, Tata Batteries, and Panasonic.

By FY28, the company aims for 50%+ revenue from value-added products and 30%+ from non-lead businesses. It plans to explore new recycling sectors in rubber, lithium, steel, and paper.

Gravita India has earmarked Rs 6 billion for capacity expansion to 500,000 MTPA (metric tonnes per annum) by FY27.

The company recorded its highest net sales in the last five quarters, amounting to Rs 8.6 billion, with net profit at Rs 68.9 million, the highest in five quarters. Non-operating income accounted for 34.4% of profit before tax (PBT), indicating substantial income from non-business activities.

4. Eco Recycling Ltd. (Ecoreco)

Ecoreco is a leader in e-waste management, serving MNCs, corporates, retailers, bulk consumers, OEMs, and government departments.

The company has established an 18,000 MT e-waste recycling facility in Maharashtra and is exploring opportunities in emerging markets.

The Increasing generation of e-waste and supportive government policies are expected to drive long-term demand for its services.

Ecoreco’s existing plant operates at around 60% capacity, with expectations to reach 75-80% in the coming quarters and further increase with the new facility.

The company produces black mass from lithium-ion batteries and is seeking partnerships for future chemical processing.

In FY24, Ecoreco prioritized higher-margin items, which limited the ramp-up in tonnage but improved profitability. Data destruction/recycling accounted for 10% of business, expected to remain between 10-12% in the current quarter.

The company aims for 100% capacity utilization by March 2026, with the new facility set for 50% utilization by March 2025 and close to 100% by March 2026.

Total revenues in FY24 surged by 64%, with net profit increasing by 163%, driven by factors like extended producer responsibility (EPR) obligations and growing awareness of e-waste recycling.

5. Pondy Oxides Chemicals Ltd (POCL)

Incorporated in 1995, POCL focuses on converting lead scraps into lead metal and alloys, and also manufactures zinc metal and zinc oxide.

The company is undertaking greenfield and brownfield capacity expansions, with an estimated investment of Rs 5.7 billion.

On 4 March 2024, POCL acquired a 122.6-acre industrial land parcel in Mundra, Gujarat, for Rs 414 million.

POCL recycles 140,000 tonnes of metal waste annually to produce lead and alloys.

FY24 revenues showed positive trends with firm margins, improved operational performance, and significant debt reduction.

The company’s growth is driven by capacity expansion, operational efficiencies, a strong balance sheet, experienced management, and robust stakeholder support.

In conclusion, Investing in waste management stocks in India is promising due to several key factors.

As India undergoes rapid urbanization and population growth, waste management becomes increasingly critical.

The government’s push for cleaner, sustainable practices and stricter environmental regulations positions the sector for growth.

Rising environmental consciousness also boosts demand for eco-friendly waste solutions.

Investing in waste management stocks offers financial opportunities and contributes to India’s long-term sustainability.

However, thorough research and due diligence are essential before investing in this sector.