GANESHA ECOSPHERE LTD.

6th Nov 2021

RECOMMENDATION : BUY

MARKET PRICE : Rs.506.20 (As on 4th Nov 2021)

TARGET PRICE : Rs.608.00

FACE VALUE : Rs.10

BSE CODE : 514167

NSE CODE : GANECOS

Established in 1987, Ganesha Ecosphere Ltd. has emerged as one of the leading rPET Fibre manufacturers in India. The Company pioneered the manufacture of rPET Fibre and rPET Yarn from pre and post consumer PET Bottle scrap. The Company’s products find application in the manufacture of textiles (T-Shirts, body warmers etc.), functional textiles (non-woven air filter fabric, geo textiles, carpets, car upholstery) and fillings (for pillows, duvets, toys).

The Company being in sustainable business of PET plastic Recycling, it aims to collect maximum PET waste through its PAN India network and minimise its environmental impact by turning it into resource. Having its manufacturing units at Kanpur (Uttar Pradesh), Rudrapur (Uttarakhand), and Bilaspur (Uttar Pradesh) Ganesha has a cumulative capacity of 1,18,800 TPA (1.08,600 TPA of RPSF and 7200 TPA of RPSY and 3000 TPA of Dyed and Texturised/ Twisted Filament Yarn) of rPET Fibre and yarn.

ABOUT THE COMPANY

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YEARLY RESULTS OF GANESHA ECOSPHERE (in Rs. Cr.) MAR '21 MAR '20

Net Sales/Income from operations 751.14 888.83

Total Income From Operations 751.14 888.83

EXPENDITURE

Consumption of Raw Materials 460.36 557.00

Purchase of Traded Goods 18.77 14.26

Increase/Decrease in Stocks -3.59 -25.75

Power & Fuel -- 83.97

Employees Cost 48.01 60.02

Depreciation 27.16 28.05

Other Expenses 143.10 87.64

P/L Before Other Inc., Int., Excpt. Items & Tax 57.33 83.64

Other Income 9.43 7.40

P/L Before Int., Excpt. Items & Tax 66.76 91.05

Interest 8.81 7.77

P/L Before Exceptional Items & Tax 57.95 83.27

P/L Before Tax 57.95 83.27

Tax 14.43 19.59

P/L After Tax from Ordinary Activities 43.52 63.68

Net Profit/(Loss) For the Period 43.52 63.68

Net P/L After M.I & Associates 43.52 63.68

Equity Share Capital 21.83 21.83

Reserves Excluding Revaluation Reserves 495.13 455.65

EPS BEFORE EXTRA ORDINARY

Basic EPS 19.94 29.17

Diluted EPS 19.94 29.17

EPS AFTER EXTRA ORDINARY

Basic EPS. 19.94 29.17

Diluted EPS. 19.94 29.17

Key

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KEY FINANCIAL RATIOS OF GANESHA ECOSPHERE (in Rs. Cr.) MAR 21 MAR 20PER SHARE RATIOSBasic EPS (Rs.) 19.94 29.17Diluted EPS (Rs.) 19.94 29.17Cash EPS (Rs.) 32.38 42.02Book Value [ExclRevalReserve]/Share (Rs.) 236.82 218.73Book Value [InclRevalReserve]/Share (Rs.) 236.82 218.73Revenue from Operations/Share (Rs.) 344.09 407.17PBDIT/Share (Rs.) 43.03 54.56PBIT/Share (Rs.) 30.58 41.71PBT/Share (Rs.) 26.55 38.15Net Profit/Share (Rs.) 19.94 29.17NP After MI And SOA / Share (Rs.) 19.94 29.17PROFITABILITY RATIOSPBDIT Margin (%) 12.50 13.39PBIT Margin (%) 8.88 10.24PBT Margin (%) 7.71 9.36Net Profit Margin (%) 5.79 7.16NP After MI And SOA Margin (%) 5.79 7.16Return on Networth/Equity (%) 8.41 13.33Return on Capital Employed (%) 11.54 16.30Return on Assets (%) 5.82 9.56Total Debt/Equity (X) 0.23 0.17Asset Turnover Ratio (%) 100.51 133.54LIQUIDITY RATIOSCurrent Ratio (X) 2.32 3.23Quick Ratio (X) 1.30 1.88Inventory Turnover Ratio (X) 4.35 6.14Dividend Payout Ratio (NP) (%) 10.03 6.85Dividend Payout Ratio (CP) (%) 6.17 4.75Earnings Retention Ratio (%) 89.97 93.15Cash Earnings Retention Ratio (%) 93.83 95.25COVERAGE RATIOSInterest Coverage Ratios (%) 7.58 11.71Interest Coverage Ratios (Post Tax) (%) 7.58 11.71VALUATION RATIOSEnterprise Value (Cr.) 1,386.44 444.07EV/Net Operating Revenue (X) 1.85 0.50EV/EBITDA (X) 14.76 3.73MarketCap/Net Operating Revenue (X) 1.71 0.41Retention Ratios (%) 89.96 93.14Price/BV (X) 2.48 0.77Price/Net Operating Revenue 1.71 0.41Earnings Yield 0.03 0.17

Shareholding Pattern an on Sep’21

Summary ❖ With deliverance of fine performance in Q2 of FY22, the Company’s Net Sales grew up by 25.18% i.e. Rs.247.89 crs in

Sep’21 as compared to Rs.198.02 crs in Sep’20. However, the Net Profits increased by 20.03% i.e. Rs.14.26 crs in Sep’21 versus Rs.11.88 crs in Sep’20.

❖ Considering good financials and sound valuations , the Company is available at a fair price of Rs.506.20 with its 52 week low at Rs.256.70 and 52 week high at Rs.688.50.

❖ Since the Promoters are holding majority stake around 42.24% as well as its consistent performance, anticipates that the Management is working efficiently and is working towards growth of the Company.

❖ In Public Shareholding as on Sep’21, the FIIs stood with 0.05% stake. Whereas, the Mutual Fund Houses own 15.81% holdings.

❖ As a fact of reassurance, Ganesha Ecosphere Ltd. is held by SBI MF, DSP MF and TATA MF.

❖ On consolidated basis, Return on Equity (ROE) and Return on Capital Employed (ROCE) were registered around 8.41% & 11.54% respectively as on Mar’21.

❖ For the year ending Mar’21, Ganesha Ecosphere Ltd. has declared an equity dividend of 20.00% i.e. Rs.2.00 per equity share. The Company has a good dividend track report and has consistently declared dividends for the last 5 years.

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List of Associates / Relatives:

1. My spouse, Mrs. Priya Sharma 2. My daughter, Ms. Priyanka Sharma 3. My son, Master Priyanshu Sharma

Note: Subject Company is a company on which buy/sell recommendation or target price is given or changed in the research report.

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