Hidden Gem: Recycling stock that specializes in manufacturing of recycled polyester fibre - Trade Brains

by Trade Brains | Oct 31, 2024 | 8:00 pm | News, Trending News | 0 comments

Divyadhan Recycling Industries Limited (DRIL) is a key player in the recycling sector, specializing in the production of Recycled Polyester Staple Fibre (R-PSF) and recycled pellets. The company focuses on promoting environmental sustainability by recycling post-consumer PET bottles.

DRIL has a manufacturing capacity of 18,000 metric tons (MT) of Recycled Polyester Staple Fiber (R-PSF) per annum. This production is facilitated by their state-of-the-art facility located in Baddi, Himachal Pradesh, which utilizes advanced Chinese manufacturing machinery to ensure high-quality output from recycled PET bottle scrap

DRIL operates a cutting-edge facility that features an in-house production line for creating PET flakes. This vertical integration enables the company to maintain the highest quality of raw materials, which are crucial for producing recycled fiber. The production process involves collecting and sorting post-consumer PET bottles, followed by cleaning, shredding, and processing to produce flakes that meet rigorous quality standards.

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Leveraging the high-quality PET flakes produced in-house, DRIL manufactures Recycled Polyester Staple Fibre (R-PSF), essential for various textile applications, such as apparel, home textiles, and non-woven fabrics. The production of R-PSF involves melting the PET flakes, spinning them into fibers, and cutting them into staple lengths suitable for different textile products.

In addition to R-PSF, DRIL also produces recycled pellets, which are utilized across various industries, including packaging, automotive, and consumer goods. These pellets serve as a sustainable alternative to virgin plastics, helping to minimize environmental impact.

DRIL recently launched its Initial Public Offering (IPO), which took place from September 26 to September 30, 2024, to raise Rs.24.17 crores.

The proceeds from the IPO will be allocated as follows: Rs.17.04 crores (70.50 percent) for the purchase of plant and machinery, Rs.6.04 crores (25 percent) for general corporate purposes, and Rs.1.09 crores (4.5 percent) for issue expenses and other costs.

With a market capitalization of Rs.110 crore, DRIL’s share price is currently at Rs.76.80 per share, rising 3.57 percent from its previous close of Rs.74.15 apiece.

According to its recent financials, revenue from operations of DRIL decreased by 2.1 percent to Rs.56.13 crore in FY24, from Rs.57.34 crore in FY23.

However, the Profit After Tax (PAT) surged 10.2 percent to Rs.2.38 crore in FY24, compared to Rs.2.16 crore in FY23.

In terms of return ratios, Divyadhan Recycling Industries Limited (DRIL) currently has a return on capital employed (ROCE) of 24.0 percent and a return on equity (ROE) of 22.3 percent.

Additionally, the net profit margin for FY23-24 was 4.24 percent. The company maintains a current ratio of 1.14 and a debt-to-equity ratio of 0.47. Currently, the stock is trading at a Price-to-earnings ratio of 46.2, which is significantly higher than the industry average of 25.1.

Written by – Siddesh S Raskar

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