Antony Waste Handling (AWHCL): Turning Trash into Treasure

Company Overview

AWHCL has been at the forefront of the sustainable waste management sector for over two decades. With a workforce of 9,378 employees and a fleet of 2,094 specialized vehicles, the company serves more than 43 lakh households nationwide. AWHCL operates Asia's largest waste processing facility in Kanjurmarg, Mumbai, which processes approximately 5,800 tonnes of waste daily. The company has successfully executed over 35 projects and currently holds 16 active C&T contracts.

Industry Analysis

• The vehicle scrapping market in India is expected to reach INR 43,000 crore by 2030, with Delhi NCR and Mumbai MMR contributing 8% and 3.5% of the market share, respectively (PwC estimates).
• Heavy Motor Vehicle (HMV) scrapping dominates the market with a 50% share, followed by Light Motor Vehicle (LMV) scrapping at 28%.
• India's waste management market is projected to reach approximately $14 billion by 2025, with significant growth potential as only 30% of the country's 75% recyclable waste is currently recycled.
• Adoption of a circular economy in India is expected to bring $624 billion in annual benefits and a 44% reduction in greenhouse gas emissions by 2050.

Historical Performance

• Revenue growth from INR 276 crore in FY18 to INR 876 crore in FY23, at a CAGR of 25%.
• Net profit expansion from INR 40 crore in FY18 to INR 85 crore in FY23, at a CAGR of 18%.
• Consistent EBITDA margin in the range of 20-25% during the period, highlighting high profitability.

Key Drivers and Investment Thesis

1. Market Leadership: AWHCL is the second-largest domestic participant in the MSW sector, serving 43 lakh households with a 7.7-year average contract life and operating Asia's largest waste processing facility.
2. Diversified Services: The company offers end-to-end MSW solutions with 2,094 specialized vehicles through subsidiaries, contributing to annual MSW processing of 5,800 tonnes.
3. Extensive Experience: Over two decades of operational excellence with 35+ completed and ongoing projects, securing 16 active C&T contracts.
4. Strong Financial Performance: Consistent revenue growth (44% PAT CAGR FY19-21) and profitability supported by diverse revenue streams.
5. Focus on Sustainability: Commitment to ESG principles through emission reduction, renewable energy use (one site meets 80% of operational needs), and sustainable practices like adhering to BS-VI vehicle standards.
6. Rising Urbanization: India's urban population is expected to double by 2050, leading to 67% of MSW generated in urban areas, driving demand for efficient waste management solutions.
7. Government Initiatives: Swachh Bharat Mission aims for 100% scientific processing of MSW by 2024, allocating significant budgets and creating a conducive regulatory environment.

Financial Analysis and Valuation

Based on our analysis, we project AWHCL's FY25 EPS at INR 35.6 and assign a multiple of 21x. This results in a target price of INR 746, implying a 49% upside potential within the next 12-18 months.

Recommendation

We recommend a "Buy" rating for Antony Waste Handling Cell Limited, considering its strong market position, diversified service offerings, focus on sustainability, and growth prospects in the rapidly expanding waste management sector in India. The company's consistent financial performance, coupled with supportive industry trends and government initiatives, further strengthens its investment case.