Key Financial Performance (Q2 FY27)

  • Operating Revenue: ₹321 crores, up 25% Year-on-Year (YoY), a company record for a quarter.
  • H1 FY27 Revenue: ₹582 crores, up 15% YoY.
  • EBITDA: ₹58 crores for Q2, with a margin of 17.6%.
  • H1 FY27 EBITDA: ₹103 crores, with a margin of 17.2%.
  • Exceptional Expense: ₹20 crores booked in Q2 for the PCMC Moshi incident, covering impairment of PPE, restoration costs, and employee compensation.

Key Financial Performance (H1 FY27)

  • Revenue Mix: Collection & Transportation (C&T) contributed 66% of revenue (₹394 crores, up 26% YoY); MSW Processing contributed 21%; Other Operating Income was 11%; Contract and other income was 3%.
  • Other Operating Income: Grew 32% to ₹65 crores, comprising sale of RDF, compost, EPR, interest income, and sweeping income.

Operational Performance

  • Total Waste Handled (Q2): 1.28 million tonnes, up 1% YoY.
  • H1 Waste Handled: 2.71 million tonnes, up 5% YoY.
  • C&T Volumes (Q2): ~0.6 million tonnes, up 12% YoY.
  • Processing Volumes (Q2): 0.68 million tonnes, down 7% YoY, primarily due to the suspension at the PCMC Moshi facility.
  • PCMC Moshi Waste-to-Energy Facility: Power generation remains suspended following a July 2026 incident. Material recovery and composting operations have resumed, processing 33,600 tonnes of waste in Q2. Restoration is ongoing with an expected functional date by December 2026. The delay is partly attributed to global supply chain issues (Hormuz Strait embargoes).
  • New Businesses:
  • Construction & Demolition (C&D) recycling facility in Mumbai saw processing volumes rise ~70% YoY with a 96% recycling rate. H1 revenue was ~₹18 crores, with full-year guidance of ₹34-38 crores.
  • RDF sales grew 23% YoY in Q2 to ~49,000 tonnes (H1: ~89,000 tonnes).
  • Sustainability: Operations avoided ~4,132 tonnes of CO2 equivalent emissions in H1.

Balance Sheet & Cash Flow (as of September 2026)

  • Gross Debt: ~₹449 crores.
  • Cash & Bank Balance: ~₹63 crores.
  • Net Debt: ~₹386 crores.
  • Net Debt-to-Equity: 0.4x.
  • Weighted Average Cost of Debt: ~10%.
  • Days Sales Outstanding (DSO): 114 days as of September 30, 2026. Management noted that ~₹108 crores was collected subsequently and that DSOs historically swing between 90-115 days due to municipal budgetary cycles.

Margin Commentary

Margins were temporarily impacted by two factors:

1. A ₹27 crore Expected Credit Loss (ECL) provision under Ind AS 109, made against approved past escalation claims. This provision is expected to reverse upon collection.

2. The absence of high-margin power sales from the suspended PCMC Moshi facility.

Management expects margins to recover progressively as Moshi resumes and new projects mature.

Growth Guidance & Outlook

  • Order Book: ~₹18,000 crores, providing strong revenue visibility.
  • Revenue Guidance: Reiterated ~20% Revenue CAGR over the next 3-5 years.
  • Growth Drivers: Ramp-up of recently commenced operations (e.g., Mumbai C&T contract to contribute ~₹80 crores upon full commissioning in Q4), an active bid pipeline, and waste-to-energy projects in Andhra Pradesh (AP).
  • AP Waste-to-Energy Projects: Expected to start contributing to revenue from core power sales in Q1 FY29. Each project is expected to generate ~₹70-75 crores annually. Capex for these projects will be recognized as contract revenue over the construction period (FY28 expected to see ~₹300 crores in contract revenue).

Other Business Updates

  • Diversification: The company is developing new verticals including pest management/deep cleaning services and PET bottle collection/baling for an FMCG major, with plans to expand to three more cities.
  • CBG Projects: In discussions with OMCs and municipalities, though no deals have been finalized.
  • Dividend: The company paid its maiden dividend in FY27, commemorating 25 years.

Capital Allocation & Returns

Management stated that project-level hurdle rates for PPP projects are competitively bid and typically range from 11% to 14%. The focus is on growing the business and attracting technically superior investors (e.g., MIT, JFE).

Q&A Highlights

  • Receivables: Cash collection improves from November to January but dries down in the last quarter of the budget year. The company uses vendor financing and short-term credit limits to manage working capital.
  • PAT Recovery: Conversion from EBITDA to PAT is expected to be healthy, excluding exceptional items, with a steady state of depreciation and interest, and a tax rate of ~27%.
  • Valuation: Management acknowledged investor concerns about market cap erosion and highlighted efforts to attract quality shareholders and the absence of listed peers for valuation comparison.