Ah ok. I misunderstood.
There are a couple of reasons:-
- The policy tailwinds from the govt. with EPR and BWMR. This should rapidly formalise this sector. At present 65% is unorganised.
- Gravita has started hedging. So margin volatility should reduce
- This sector takes 7-8years for network development. I believe that phase of tolling is over which was a low margin business. Operating leverage should now play out. Current plant utilization is only 57%. Should inch towards 80-85%
- Recycled products take long time for customer approval. These approvals are available with Gravita now.
So barriers to entry are high and policy tailwinds clubbed with operating leverage should give it a kick.
Hope this answers the query.
However, this is purely my personal opinion.
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