Top 4 Metal Recycling Companies You Can’t Miss

At a time when sustainability is dominating discussions around the world, the metal recycling industry is a perfect example of how profit and the planet can go hand in hand. As we move towards a circular economy, investing in the best metal recycling stocks not only supports a greener future, but also takes advantage of a dynamic market with significant growth potential.

Here are some standout players in the metal recycling industry:

Gravity India

First on the list is Gravita India, one of the largest leading manufacturers in the country. The company produces lead, zinc and copper alloys and has recently expanded into plastic recycling, which is widely used in various industrial sectors.

Financially, Gravita India performed well in the first quarter of FY25. The company reported revenue growth of 29.1% year-on-year, led by growth in lead and plastics segments. Operating profit increased by 50.2% and net profit by 29.3%. Improved profitability in the aluminum industry, resulting from higher prices on the LME, further contributed to this impressive result.

Looking ahead, Gravita is investing heavily in future growth, making strategic moves towards recycling lithium-ion batteries and tires. Its expansion into rubber, paper and steel recycling signals a clear intention to diversify revenue streams and reduce reliance on traditional materials.

Gravity’s strong supply network of over 1,500 touchpoints and a customer base spread across 38 countries give the company a competitive advantage. The company has demonstrated solid performance in recent years, driven by rising demand and capacity expansion.

With its strong financial condition and optimistic growth and profitability prospects, Gravita India is well positioned for continued success.

Nil limited liability company

Second on the list is Nile Ltd, a producer of pure lead intended mainly for batteries, founded 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 reported strong results for the June 2024 quarter, with consolidated revenues up 52.2% to ₹2.4 billion. EBITDA saw a significant jump of up to 70.7%. ₹133 million, and the EBITDA margin improved to 5.3% from 4.7% a year earlier. The company’s net profit for the first quarter of FY25 was ₹90 million, with margins increasing to 27.2% from 25.8%.

Nile operates two lead recycling plants, one in Choutuppal with a capacity of 32,000 TPA and the other 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 facility, and NEPL, which will serve the nutraceutical, cosmetics and food industries by focusing on natural extracts.

Although Nile’s two largest customers account for all sales, with Amara Raja Batteries accounting for almost 91% of those sales, the company’s high customer concentration remains a notable aspect of its business model. Despite this, Nile’s management is optimistic about future development and plans investments ₹600 million in NLCPL by FY26 and an expected increase in both revenue and profit margin.

Pondy Oxides and chemicals

Pondy Oxides & Chemicals, India’s leading non-ferrous metal recycling company, is the largest producer of secondary lead in the country. The company processes lead-acid batteries and various types of scrap, including copper, zinc and plastics, into secondary lead, which is then refined into pure lead and certain lead alloys.

With a strong domestic and international presence, Pondy Oxides exports 60% of its products to over 20 countries, serving sectors such as lead-acid batteries, electronics, chemicals, plastics and pharmaceuticals. Thirty years of industry experience, along with long-term contracts with major original equipment manufacturers (OEMs), give the company a competitive advantage. Moreover, its well-diversified supplier base of over 270 suppliers in 90 countries enhances its market strength.

Financially, Pondy Oxides performed well in the first quarter of FY25, with revenues growing 37% year-on-year, driven by higher production, sales and improved performance in both lead and plastics segments. This increase translated into an increase in Ebitda by 76%, with an increase in margins from 4% to 5%. It is worth noting that the company’s net profit increased by 216%, which is due to increased operational efficiency and lower financial costs.

The company’s commitment to profitability and energy efficiency through recycling continues to offer producers a viable alternative to traditional mining. Looking ahead, Pondy Oxides plans to enter new verticals including lithium-ion and e-waste recycling, and expand into segments such as plastics, rubber, petroleum and value-added products.

The company’s focus on capacity expansion is underscored by the ongoing construction of a new facility in Thervoykandigai, Tamil Nadu, which will increase lead production capacity from 132,000 MTPA to 204,000 MTPA in two phases. This strategic investment is financed from internal funds and proceeds from a preferential issue, which signals continuous growth and diversification.

Eco recycling

Eco Recycling (Ecoreco) is a pioneer and leader in the Indian e-waste management sector. Serving a diverse customer base including multinational corporations, corporates, retailers, OEMs, mass consumers and government departments, Ecoreco offers comprehensive, end-to-end solutions. These include reverse logistics, data destruction, information technology asset disposal (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 reported impressive results for the June 2024 quarter, with total revenues growing 69.5% to ₹134 million. EBITDA increased by 76.4% to ₹102 million, which resulted in an improvement in EBITDA margin by 298 basis points to 76.1%. Consolidated PAT also increased by 73%, reaching ₹82 million and increasing the PAT margin to 60.6%.

Management remains optimistic about future growth, setting interim targets for significant revenues in 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 increased awareness of e-waste management, Ecoreco is well positioned for sustainable growth.

The company also recently launched a new 18,000-tonne e-waste recycling facility in Maharashtra and is exploring opportunities in emerging markets to serve multinational corporations.

Application

The metal recycling industry offers significant potential for growth and innovation. However, challenges such as market fluctuations, regulatory changes and competition remain obstacles for companies seeking to lead in sustainability. The transition to a circular economy requires ongoing commitment and adaptability, which may be difficult for some actors.

To make informed investment choices, you must conduct thorough research, stay up to date with industry trends, and be aware of potential risks. This approach will help you align your financial goals with a sustainable future.

Have fun investing!

Disclaimer: This article is for informational purposes only. This is not a stock recommendation and should not be treated as such.

This article comes from Equitymaster.com