Buy Eco Recycling Ltd.

Search Google for the article “Attero Recycling mops up more PE money for expansion”. The company has recently raised Rs 100 Crs in equity funding from PE Firm. The company has so far raised Rs 190 Crs from various investors. Attero is India's largest integrated end to end electronics asset management company and posses proprietary technology to recycle electronic waste and extract precious metals, and counts companies such as General Electric, Google, Wipro and Samsung as its clients.

With e-wastes piling up each day, there has become an ever increasing need to have a disposal mechanism in an organised way. The need for e-waste disposal would become all the more compelling with smart cities coming up in future.

Recommending to buy Eco Recycling from the same line of business as Attero for a long term view. Eco Recycling Ltd. is a long term buy due to reasons as under:

1. Presence in a niche segment with huge growth potential in future.

2. Sales constantly increasing for past 5 years. The PAT for June 15 has decreased YOY but I feel that company is in a growth phase and one should focus more on the topline. PAT may be lower due to various reasons like interest out go on expansion, high fixed cost on assets etc. Once company stablises and achieves a decent market share, profits automatically comes in.

3. Increase in promoters shareholding over the years.

4. Media Giant Times Group (Bennett Coleman & Company Ltd.), has acquired 7.98% stake in the company at Rs 43 per share.

5. Ecoreco is in the process of setting up another facility for recycling of home appliances near Bhiwandi, Maharashtra, with the kind support of NEDO, Mitsubishi Materials Corporation and Nippon Magnetic Dressing Co. Ltd. These are all big Japanese names taking interest in the company. Nippon Magnetic Dressing is a 60 year old company, pioneer and world leader in recycling and is holding 4.56% stake in the company at Rs 40 per share. Do a google to read more about it.

6. Further Catholic Syrian Bank also holds 1.94% stake in the company.

7. Recent PE deal in Attero further reinforces investors interest in this segment.

Recommending to buy at cmp of Rs 24 with a long term view for multibagger returns.