.jpg)
Synopsis : Kotak predicts winners: plastic recyclers like Ganesha Ecosphere and innovative packaging firms like EPL, Uflex, and ITC, benefit from new plastic waste rules.
Kotak stated that Britannia Industries, Colgate-Palmolive, and Nestle India will face the greatest impact, whereas Godrej Consumer Products Ltd (GCPL), ITC, Jyothy Labs, and Varun Beverages Ltd (VBL) will experience minimal impact from the new plastic waste management measures.
Kotak Institutional Equities stated that Britannia Industries Ltd, Colgate-Palmolive Ltd, and Nestle India Ltd will face the greatest impact among consumer companies as India enforces mandatory regulations for plastic packaging recycling and reuse starting FY2025 to tackle the plastic waste issue. The brokerage highlighted India's position as the third-largest plastic waste generator globally and suggested that these laws could elevate India's status in managing plastic waste internationally. However, it also cautioned that the new regulations would lead to increased packaging costs for consumer staple companies.
Kotak noted that Britannia Industries, Colgate-Palmolive, and Nestle India will face the most significant impact from the new plastic waste management (PWM) rules, whereas Godrej Consumer Products Ltd (GCPL), ITC, Jyothy Labs, and Varun Beverages Ltd (VBL) will be less affected.
The assessment is based on the companies' relative revenue exposure to five key variables: plastic, transparent plastic, food-grade plastic, flexible plastic, and MLP. It is anticipated that the cost increase will be more pronounced for companies utilizing a higher proportion of: (1) hard-to-recycle flexible plastics and MLP, and (2) product categories necessitating the use of premium-grade recycled plastic, such as food and beverages and items requiring transparent packaging, which typically trade at a 40-60 per cent premium to virgin plastics.
Kotak highlighted that plastic recyclers like Ganesha Ecosphere and forward-thinking packaging firms such as EPL, Uflex, and ITC, which offer solutions for enhancing plastic recyclability, developing products utilizing PCR, and presenting cost-effective alternatives to plastics, will emerge as the primary beneficiaries following the implementation of the new PWM regulations.
The statement anticipates the consolidation of the plastic recycling industry, with a few major players emerging. Additionally, it suggests that chemical recycling, though currently economically unviable with products selling at approximately 2-3 times the cost of virgin equivalents, may become the ultimate solution for plastic end-of-life management in the future. Reliance and Uflex, being early adopters, are positioned to spearhead this transition in India.
Related Questions
1. Which companies are expected to face the greatest impact from India's new plastic waste management measures?
Britannia Industries, Colgate-Palmolive, and Nestle India are expected to face the greatest impact from India's new plastic waste management measures.
2. Which companies are anticipated to be less affected by the new plastic waste management rules?
Godrej Consumer Products Ltd (GCPL), ITC, Jyothy Labs, and Varun Beverages Ltd (VBL) are anticipated to be less affected by the new plastic waste management rules.
3. How are plastic recyclers and packaging firms expected to benefit from the new plastic waste management regulations?
Plastic recyclers like Ganesha Ecosphere and forward-thinking packaging firms such as EPL, Uflex, and ITC are expected to benefit from the new plastic waste management regulations by offering solutions for enhancing plastic recyclability and presenting cost-effective alternatives to plastics.
4. What is the anticipated future of chemical recycling in India according to Kotak?
Chemical recycling, though currently economically unviable, may become the ultimate solution for plastic end-of-life management in the future. Reliance and Uflex are positioned to spearhead this transition in India.
.jpg)
