Yes, they are not generating enough cash…currently that is! If you are running a filter on screener for these metrics, Ganesha Ecosphere will not fit the bill of an ideal investment. However, one needs to think forward here and understand the rate of change that is likely to take place.

Ganesha Ecosphere is operating in an industry with enormous tailwinds (and most of these are yet to even begin), with huge market share to be gained by the organized players (from the unorganized). Scale at the sourcing level + first mover on customer acquisition is the name of the game here. Ganesha Ecosphere has to go all-out in capex like they are doing to seal the advantage of Scale benefits. And clearly the company seems to have huge visibility for the same and hence is confident on more that doubling rPet chips/granules capacity. I get the sense of this when I listen to the company’s concalls as well.

Ganesha Ecosphere has hinted that they are the recyclers for some of the biggest FMCG names and more such deals are in the works. Just imagine the possibility of Ganesha Ecosphere being a proxy play to the FMCG sector! The valuations and market-cap of such a company is potentially enormous!

In fact while you rightly point to the good numbers only “optically” looking good, I want to flip this around and say that the bad cash flow + rising debt levels only look “optically” bad. All this is set to improve dramatically if Ganesha Ecosphere pulls off their strategical moves.

For me personally, it remains to be a very exciting story to observe unfolding as a shareholder of the company.

Disclosure: Invested since late 2022 and is my largest holding. Continue to hold on as I’m extremely bullish on Ganesha Ecosphere. Ofcourse I run the risk of being heavily biased due to my position.