In an era where sustainability dominates global conversations, the metal recycling industry stands as a prime example of how profit and planet can go hand in hand. As we shift toward a circular economy, investing in top metal recycling stocks not only supports a greener future but also taps into a booming market with significant growth potential.
Here’s a look at some standout players in the metal recycling space:
Gravita India
First on the list is Gravita India, one of the country’s largest lead producers. The company manufactures lead, zinc, and copper alloys and has recently expanded into plastic recycling, which is widely used across various industrial sectors.
Financially, Gravita India delivered a strong performance in Q1 FY25. The company saw a 29.1% year-on-year increase in revenues, supported by growth in its lead and plastic segments. Operating profit surged by 50.2%, while net profit rose by 29.3%. Improved profitability in the aluminium business, driven by higher LME prices, further contributed to this impressive outcome.
Looking ahead, Gravita is heavily investing in future growth, with strategic moves into lithium-ion battery and tyre recycling. Its expansion into rubber, paper, and steel recycling signals a clear intent to diversify revenue streams and reduce reliance on traditional materials.
Gravita’s strong procurement network, with over 1,500 touchpoints, and its customer base spread across 38 countries, gives the company a competitive edge. The company has demonstrated solid performance in recent years, driven by rising demand and capacity expansions.
With sound financial health and an optimistic outlook on growth and profitability, Gravita India is well-positioned for continued success.
Nile Ltd
Second on the list is Nile Ltd, a manufacturer of pure lead primarily for battery consumption, incorporated in 1984. Nile is a secondary producer of pure lead and lead alloys, supplying these materials to manufacturers of lead-acid batteries, PVC stabilizers, and lead oxide.
Financially, Nile Ltd posted robust results for the June 2024 quarter, with consolidated revenues increasing by 52.2% to ₹2.4 billion. EBITDA saw a significant jump of 70.7%, reaching ₹133 million, and EBITDA margins improved to 5.3% from 4.7% in the previous year. The company’s net profit for Q1 FY25 stood at ₹90 million, with margins rising to 27.2% from 25.8%.
Nile operates two lead recycling plants, one in Choutuppal with a capacity of 32,000 TPA and another in Tirupati with a capacity of 75,000 TPA. The company also has two wholly-owned subsidiaries: NLCPL, which is setting up a lithium-ion battery recycling plant, and NEPL, which will serve the nutraceutical, cosmetic, and food industries through its focus on natural extracts.
While Nile’s top two customers account for all its sales, with Amara Raja Batteries contributing nearly 91%, the company’s high client concentration remains a notable aspect of its business model. Despite this, Nile’s management is optimistic about future growth, with plans to invest ₹600 million in NLCPL by FY26 and an expected expansion in both revenue and profit margins.
Pondy Oxides & Chemicals
Pondy Oxides & Chemicals, India’s leading nonferrous recycling company, is the largest manufacturer of secondary lead metal in the country. The company recycles lead-acid batteries and various types of scrap, including copper, zinc, and plastic, into secondary lead metal, which is then refined into pure lead and specific lead alloys.
With a strong presence in both domestic and international markets, Pondy Oxides exports 60% of its products to over 20 countries, serving sectors such as lead-acid batteries, electronics, chemicals, plastics, and pharmaceuticals. Its three-decade-long experience in the industry, along with long-term contracts with major original equipment manufacturers (OEMs), gives the company a competitive edge. Furthermore, its well-diversified supplier base, with over 270 suppliers across 90 countries, reinforces its market strength.
Financially, Pondy Oxides delivered a strong performance in Q1 FY25, with revenues surging by 37% year-on-year, driven by higher production, sales, and better realisations in both the lead and plastics segments. This growth fueled a 76% increase in Ebitda, with margins expanding from 4% to 5%. Notably, the company’s net profit jumped by 216%, attributed to enhanced operational efficiency and lower finance costs.
The company’s commitment to cost-effectiveness and energy efficiency through recycling continues to offer manufacturers a viable alternative to traditional mining. Looking forward, Pondy Oxides plans to introduce new verticals, including lithium-ion and e-waste recycling, and expand into segments like plastics, rubber, oil, and value-added products.
The company’s focus on capacity expansion is underscored by its ongoing construction of a new facility in Thervoykandigai, Tamil Nadu, which will increase its lead capacity from 132,000 MTPA to 204,000 MTPA over two phases. This strategic investment is being funded through internal accruals and proceeds from preferential issue, signalling continued growth and diversification.
Eco Recycling
Eco Recycling (Ecoreco) is a pioneer and leader in India’s e-waste management sector. Catering to a diverse client base, including multinational corporations, corporates, retailers, OEMs, bulk consumers, and government departments, Ecoreco offers comprehensive, end-to-end solutions. These include reverse logistics, data destruction, Information Technology Asset Disposition (ITAD), e-waste recycling, lamp recycling, precious metal recovery, and the implementation of Extended Producer Responsibility (EPR) and CSR initiatives.
On the financial front, Ecoreco posted impressive results for the June 2024 quarter, with total revenue surging by 69.5% to ₹134 million. EBITDA increased by 76.4% to ₹102 million, resulting in an EBITDA margin improvement of 298 basis points to 76.1%. Consolidated PAT also rose by 73%, reaching ₹82 million, and boosting PAT margins to 60.6%.
Management remains optimistic about future growth, targeting significant revenue milestones for FY25. Their strategy emphasizes value over volume, focusing on maintaining high margins through premium services and a compliance-driven approach. With growing regulatory support and heightened awareness of e-waste management, Ecoreco is well-positioned for sustained growth.
The company has also recently established a new e-waste recycling facility in Maharashtra, with a capacity of 18,000 MT, and is exploring opportunities in emerging markets to serve multinational corporations.
Conclusion
The metal recycling industry offers significant potential for growth and innovation. However, challenges such as market fluctuations, regulatory changes, and competition remain hurdles for companies aiming to lead in sustainability. Transitioning to a circular economy demands continuous commitment and adaptability, which may be difficult for some players to navigate.
To make informed investment choices, it’s essential to conduct thorough research, stay updated on industry trends, and be mindful of potential risks. This approach will help align your financial goals with a sustainable future.
Happy Investing!
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com