To begin with I’ll try to share my investing rationale for investing in Hi-green carbon ltd.
The company is engaged in recycling of end of use tires to produce pyrolysis oil, recovered carbon black, and sodium silicate (raw glass)
Hi – Green Carbon Limited Report (1).pdf (735.9 KB)
Above I have attached a note regarding my understanding of the business and my learning’s from the company I hope you all derive some value from it.
secondly, the economics of the company’s business is what attracted me let me explain that to you:
Company on its max can generate a revenue of INR 70-80 Crores from one plant and currently it operates only one plant but two plants one in MP & Another one in Dhule, Maharashtra are under construction so after setting up three plants the company will able to generate a revenue in line of 200-250 crores at an EBITDA margin of 22-25% and PAT Margins of 15-18% which will give company enough revenue to setup another plant from internal accruals only and they will need just 10-12 crores in working capital.
Plus, they are getting 80% GST subsidy on capex done in Maharashtra which will lower there capex cost and are getting 40% subsidy on capex done in MP so again that will lead to decrease in capex cost leading to higher ROIC.
The company is not only certified from Indian govt. but also from ISCC and REACH which further indicates good operating standard as it a highly regulated industry so it gives a boost to them.
Secondly, the company is able to establish plant at a cost of 40-50 crores which is the main advantage that they have as to setup similar plant outside India it takes 200-300 crores in capex and it gets confirm while looking at its global peers.
The company is able to pass on the increase in cost to its customer and company if it matches the input and ouput cost, with increase in capacity and expansion in EBITDA margins that will be massive.
I can be biased as well and as a student i would always like to here the feedback from all of you…
Disc - it is not a buy or sell call it is just for educational purpose
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