Antony Waste Handling Cell Ltd Q3 FY25 concall analysis

Here’s a detailed breakdown of the management commentary from Antony Waste Handling Cell Ltd’s Q3 FY2024-25 earnings conference call:

1. Financial Performance Overview

1.1 Revenue Performance

  • Quarterly Operating Revenue: ₹221 crores (15% YoY growth).
  • Total Revenue (including recyclables & RDF sales, excluding contract revenue): ₹243 crores (12% YoY growth).
  • Breakdown of Revenue Streams:
    • Municipal Solid Waste (MSW) Collection & Transportation: ₹163 crores (18% YoY growth).
    • Processing Business: ₹58 crores (9% YoY growth).
    • Other Revenues (including tipping fees, recyclables, RDF, power sales, etc.): ₹22 crores.
  • Key Revenue Drivers:
    • Higher waste processing volumes.
    • Increased revenues from RDF and compost sales.
    • Higher tipping fees (due to escalations in minimum wages & fuel costs).
    • Green energy generation from PCMC Waste-to-Energy (WTE) plant.

1.2 Profitability & Margins

  • EBITDA: ₹59 crores (18% YoY growth).
  • EBITDA Margin: 24% (up by 120 basis points YoY).
  • Net Profit: ₹18 crores (16% YoY growth).
  • Improvement in Margins Due To:
    • Shift from lower-margin project revenue to core operations.
    • Operational efficiency improvements in waste processing.
    • Growth in high-margin green energy generation.

1.3 Debt & Financial Position

  • Gross Debt: ₹431 crores.
  • Net Debt: ₹366 crores.
  • Debt-to-Equity Ratio: 0.5x.
  • Weighted Cost of Debt: ~9.6%.
  • Breakdown of Debt:
    • ₹130 crores related to PCMC WTE project (interest ~10.5%).
    • ₹300+ crores in vehicle financing & processing unit loans.
  • Debt Repayment Plan:
    • Company aims to be debt-free within ~4.5 years (assuming no new large projects).
    • Received ₹45 crores out of ₹50 crores under the Viability Gap Funding (VGF) scheme.
    • Balance ₹5 crores of VGF expected by September 2025, which will be used for debt repayment.

2. Operational Performance & Expansion

2.1 Waste Management Performance

  • Total MSW Collected & Transported: ~49 million tons in Q3.
  • Total Waste Processed: ~69 million tons in Q3.
  • Overall Waste Handled: 1.18 million tons (3.2% YoY increase).
  • First 9 Months of FY25: 3.56 million tons of waste processed (5.7% YoY increase).
  • Escalation Adjustments:
    • Revenue increase was largely due to contractual price escalations in fuel prices & wage costs.
    • Most escalations kicked in during Q3, leading to higher realizations.

2.2 PCMC Waste-to-Energy (WTE) Plant

  • Power Generation: 23+ million units of green energy in Q3.
  • Plant Load Factor (PLF): 77% (higher than industry average).
  • Annual Efficiency: Achieved 71% PLF for the first full year.
  • Contribution to Revenue: Driven by sale of electricity & RDF.

2.3 Construction & Demolition (C&D) Waste Management

  • Operations Started: November 2023.
  • Total Waste Processed: 20,000+ tons so far.
  • Recycling Rate: 96% (processed into manufactured sand & aggregates).
  • Projected Revenue:
    • ₹25-30 crores annually from processing fees.
    • Additional revenue from sand & aggregate sales.
    • 3,500+ tons of manufactured sand sold in the first month alone.

2.4 Refuse-Derived Fuel (RDF) & Composting

  • Q3 Sales:
    • 38,500 tons of RDF.
    • 6,400 tons of compost.
  • 9M FY25 Sales:
    • 103,000 tons of RDF.
    • 15,600 tons of compost.
  • Annual Growth Rate: 7% YoY (driven by demand from cement companies).

2.5 Sustainability & ESG Initiatives

  • Carbon Emission Reduction:
    • CO2 Emissions Avoided: 10,172 tons.
    • Scope 1 Emissions: 19,545 tons.
    • Scope 2 Emissions: 2,213 tons.
  • Workforce Expansion: 10,157 employees.
  • Waste Reduction Success Story:
    • During the Coldplay event in Navi Mumbai, the company deployed:
      • 150+ workers & 30+ vehicles.
      • Collected 14,000 kg of waste (8,000 kg plastic recycled, 6,000 kg composted).
      • Achieved zero landfill disposal.

3. Future Growth & Expansion Plans

3.1 Upcoming Revenue Streams (FY25-26)

  1. C&D Waste Management (Full Ramp-Up)
    • Revenue Impact: ₹30-40 crores annually.
  2. Navi Mumbai Municipal Waste Collection Contract
    • Value: ₹976 crores (9-year contract).
    • Incremental Revenue: ₹100 crores annually.
    • Operations Start: April 2025.
  3. CCO Biomining Project
    • Will be operational for the full FY25.
    • Revenue Impact: ₹40-45 crores annually.

3.2 Long-Term Expansion Strategy

  1. Kanjurmarg Waste-to-Energy Plant
    • Capacity: 3,000 TPD (4-5x PCMC plant).
    • Estimated Capex: ₹800-1,000 crores.
    • Timeline: 2-3 years for completion.
  2. Plastic Waste Management (Extended Producer Responsibility – EPR)
    • Applied for certification from CPCB.
    • Awaiting credit allocation (expected update in next 1-2 quarters).
  3. Non-Municipal Waste Management Expansion
    • Tire Recycling Plant:
      • Awaiting land approvals.
      • Operations can begin within 6-9 months after approval.
    • Vehicle Scrapping Business:
      • Awaiting government approval.
    • Manufactured Sand Sales from C&D Waste:
      • Strong market demand with significant early sales traction.

4. Industry & Policy Updates

4.1 Mumbai Solid Waste Levy

  • BMC plans to charge ₹100 per household per month for solid waste management.
  • Impact on Antony Waste:
    • Stronger municipal cash flows for future waste management projects.
    • Better financial security for municipal contracts.

4.2 Mumbai Airport Shift to Navi Mumbai

  • Minimal impact expected on waste collection volumes.

4.3 New Tender Bidding

  • Actively bidding for new MSW collection, C&D waste, and waste-to-energy projects.

5. Guidance & Outlook

Revenue & Growth Projections

  • FY25 Revenue Growth: 15-18% YoY.
  • Long-Term Revenue CAGR: 20-25% over 3-5 years.
  • EBITDA Margins: Expected to remain at ~24% or improve.
  • Debt Reduction Target: Debt-free in ~4.5 years.

Key Strategic Focus Areas

  1. Sustainability & Green Energy Growth.
  2. Expansion into high-margin waste processing businesses.
  3. Investments in non-municipal waste management sectors.

Conclusion

  • Strong Q3 performance with record revenues & profit growth.
  • Upcoming large-scale projects will drive long-term revenue & EBITDA expansion.
  • Focus remains on sustainability, innovation, and operational efficiency.

Question and Answer Session Highlights

1. Profitability & Margins

Question:

In Q2, the EBITDA margin was 21.4%, and in Q3, it improved to 23.5%. What are the key cost efficiencies or revenue mix changes that are driving this improvement?

Answer:
  • The revenue mix played a significant role in margin expansion.
  • Over the last three quarters, the contribution from project-based revenues has decreased, reflecting the completion of construction phases.
  • As a result, the core operating revenue (higher margin) is now more prominent in the company’s financials.
  • This shift has helped boost margins from 20% to ~23.5%.

2. Debt & Capex Plans

Question:

Previously, guidance was given for ₹78 crores capex in FY25 and a plan to be debt-free in five years (assuming no new large projects).
Given the strong Q3 cash flow and upcoming project investments, does this trajectory still hold?

Answer:
  • Yes, the company still expects to stay on track with the capex plan and debt reduction strategy.
  • There are no major deviations expected at this point.

3. EPR (Extended Producer Responsibility) – Plastic Waste Management

Question:

What scale of revenue do you foresee from the EPR segment in the next 2-3 years?

Answer:
  • The company has applied for an EPR wallet for plastic waste processing with the Central Pollution Control Board (CPCB).
  • The approval is still pending, so exact revenue numbers cannot be provided yet.
  • More clarity is expected in the next quarter.

4. Kanjurmarg Waste-to-Energy (WTE) Project

Question:

The PCMC WTE plant has achieved a 76% PLF, which is above the industry average. Congratulations on this achievement!
With discussions ongoing for a much larger WTE plant at Kanjurmarg, what are the expected capacity and timelines?

Answer:
  • BMC has officially announced the Kanjurmarg WTE project in its recent budget.
  • The submitted proposal is for a 3,000 TPD plant (4-5x the size of the PCMC WTE plant).
  • The construction will take approximately 2-3 years.

5. Revenue Growth Breakdown

Question:

The operating revenue (C&T and processing) is up 15%, but the volume of waste handled increased by only 3%.
Does this mean that volume is becoming less significant in revenue growth?

Answer:
  • Waste collection volume grew by ~3%, which is in line with urban growth rates (typically 3-6% annually).
  • However, revenue increased more because of price escalations due to rising fuel costs and wage revisions.
  • Breakdown of 18% growth in MSW collection & transportation revenue:
    • 4% volume growth.
    • 14% increase due to price escalations.

6. Future Revenue Projections

Question:

Can you share the incremental revenue expected next year from new projects?

Answer:
  • New Navi Mumbai Waste Collection Contract (₹976 crores over 9 years):
    • Expected to contribute ₹100 crores annually.
    • 30% increase in revenue over the previous contract.
  • C&D Waste Processing Plant:
    • Estimated ₹25-30 crores annually.
    • Additional revenue from manufactured sand & aggregate sales.
  • CCO Biomining Project:
    • Estimated ₹40-45 crores annually.
    • Will be fully operational next year.

7. Debt & Interest Cost Reduction

Question:

Despite a slight increase in net debt, the average cost of debt has come down.
Have you renegotiated the PCMC WTE loan?

Answer:
  • PCMC WTE loan (₹130 crores at 10.5%) has not been renegotiated yet.
  • Refinancing is planned in ~2 years, once the PFC loan structure allows.
  • The lower debt cost is due to better operational efficiency and improved credit ratings.

8. Outstanding Receivables

Question:

Can you provide receivables data, excluding the 5% retention amount?

Answer:
  • Total receivables: ₹225 crores.
  • Long-term receivables (held for >365 days): ₹52 crores (including retention).
  • Excluding retention, old receivables (>365 days): ₹38 crores.

9. Impact of BMC User Charge Implementation

Question:

BMC is planning to levy ₹100 per household per month as a solid waste management fee.
How will this impact Antony Waste?

Answer:
  • This is a positive step, as it will improve BMC’s cash flows.
  • Better financial health for BMC means more sustainable waste management contracts.
  • Future BMC tenders & projects will have stronger financial backing.

10. Tire Recycling & Plastic Waste Processing

Question:

Are there any updates on the tire recycling & plastic waste processing businesses?

Answer:
  • Tire Recycling:
    • Awaiting land allocation from the government.
    • Once approved, operations can start within 6-9 months.
  • Plastic Waste Processing:
    • Evaluating the technical & financial feasibility of turning plastic into oil.
    • Awaiting EPR approval from CPCB.
    • More clarity in next 1-2 quarters.

11. Impact of Mumbai Airport Shift to Navi Mumbai

Question:

Will the Mumbai airport shift to Navi Mumbai impact the company’s waste collection business?

Answer:
  • No significant impact expected.
  • Most dry waste from the airport is directly recycled, rather than being processed by Antony Waste.

12. Waste-to-Energy Plant Financials

Question:

For the Kanjurmarg WTE project, can you share any estimates on capex, return metrics (IRR/ROIC), and financing plans?

Answer:
  • Estimated capex: ₹800-1,000 crores.
  • Debt-to-equity financing mix: To be determined.
  • IRR/ROIC expectations:
    • Expected to be in line with PCMC WTE project.
    • Exact metrics will be finalized once the project is awarded.

13. Market Opportunities & New Tenders

Question:

Are there any new tenders or upcoming opportunities in C&T or waste processing?

Answer:
  • Primary focus: Finalizing the Kanjurmarg WTE project with BMC.
  • Other opportunities:
    • Bidding for multiple new C&D waste processing contracts.
    • Exploring waste-to-energy projects in other cities.

Conclusion

The Q&A session highlighted:

  • Revenue growth was driven by price escalations, not just volume.
  • Debt reduction remains a priority, with a target to be debt-free in ~4.5 years.
  • Upcoming projects (Navi Mumbai, C&D waste, biomining) will drive growth.
  • BMC’s new user charge is positive for municipal waste contracts.
  • Kanjurmarg WTE plant (₹800-1,000 crores) is the next major expansion focus.
Antony Waste Handling Cell Ltd Q3fy25 resultDownload
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