Antony Waste Handling Cell Limited (AWHCL.BO) Q1 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Antony Waste Handling Cell Limited Q1 FY '26 Earnings Conference Call. This conference may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Subramanian NG, Group CFO from Antony Waste Handling Cell Limited. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone, and thank you for joining us on our Q1 FY '26 earnings conference call. I have with me SGA, our Investor Relations Adviser. Our investor presentation for the first quarter FY '26 is available on the stock exchanges and on our company's website. For the first quarter of financial year 2026, the company had a strong start, reaching peak operational and financial performance across all verticals. This performance reflects the resilience of our business model and the efficiency of our operations and our unwavering focus on sustainable growth. During the quarter, our collection and transportation operations efficiently handled approximately 0.52 million tonnes of waste while at our processing facilities, we handle around 0.81 million tonnes of multiple solid waste, reflecting a year-on-year growth of 10% and 13%, respectively. Overall, total tonnage for the first quarter FY '26 reached about 1.33 million tons, marking a 13% increase compared to the previous year same quarter. Our waste-to-energy plant delivered a strong performance, as always, operating at a healthy PLF of about 84%. This not only surpassed our expectation, but also set new industry benchmarks for a project which is up for more than 1.5 year, underscoring our capability to consistently convert waste into clean energy. In Q1 FY '26, our PCMC WTE generated over 25 million green units, underscoring our commitment to reducing fossil fuel dependency and cutting carbon emissions. These efforts resulted in the avoidance of approximately 3,432 tons of CO2 emissions, further demonstrating our focus on sustainability and responsible environmental stewardship. I would like to highlight the commercial launch of our extended producer responsibility initiative in the WTE division. With the PCMC WTE project registered to qualify for EPR credits, we have monetized 20% of the first year allocation of over 94,400 metric tons. This achievement positions us at the forefront of India's circular economic transition seamlessly integrating environmental responsibility. Furthermore, our construction and demolition waste recycling sites continue to operate smoothly setting a new industry benchmark with an impressive 96% recycling rate. This achievement not only showcases our capability to convert waste into valuable resources, but also strengthens our confidence in successfully entering and operating new businesses, further advancing our circular economy goals. Resource Recovery emerged as a key highlight this quarter with the segment recording its highest ever sales. Compost sales stood at approximately 6,600 tonnes, up 10% Y-o-Y, while Refuse Derived Fuel sales surged by an impressive 62% to around 55,500 tonnes. These achievements reflect our steadfast progress in advancing circularity, reducing reliance on landfills and fostering a greener and cleaner environment. On the ESG front, Scope 1 and Scope 2 emissions for the year were approximately 6,616 tonnes and 564 tonnes of CO2 emissions, respectively, while awarded emissions stood at about 3,432 tonnes, as I mentioned earlier. Our ground staff strength totaled around 10,300-plus underscoring our continued investment in a skilled workforce to drive operational excellence and advance our sustainability goals. A point on the legal aspect, by its order dated 1st of August 2025, the Supreme Court has stayed the Bombay High Court's judgment of May 2, 2025 in the PIL #20 of 2013. This stay maintains the status quo at the Kanjurmarg landfill allowing landfill operations to continue and safeguarding the concessions, that is Antony Lara, which is a significant subsidiary of the company's rights under the concession agreement, including the right to seek compensation for losses arising from any premature halt in operations. The special leave petitions against the High Court's decision filed by our subsidiary, the Municipal Corporation of Greater Mumbai and the state of Maharashtra challenged the quashing of the 2019 notification of about 120 acres at Kanjurmarg and the restatement of its protected forest status under the Forest Conservation Act 1980. The High Court held the notification ultraverse, ordered the restoration of the forest. Given the Supreme Court stay, we believe long-term revenue visibility under the contract remains strong, together the company's liquidity and strong net asset base, we remain very robust to handle the waste of the city of Mumbai. Now coming to the financial performance. Our operating revenue increased by 13%, reaching around INR 224 crores in Q1 FY '26 compared to the same period last year. In Q1 FY '26, we observed a notable shift in our revenue composition. MSW C&T contributed 60%, processing accounted for 28% and contracts and others comprised the remaining 12%. This marks a change from Q1 FY '25, where the respective contributions were 59%, 26% and 15%, respectively. Our diversified revenue streams continue to offer strategic flexibility and position the company for sustained long-term growth. Our focus to concentrate more on processing segment has yielded these results. In Q1 26, our C&T witnessed a strong growth in revenue, reaching INR 151 crores, registering a growth of 11% on a Y-o-Y basis. At the Processing division, we showed a growth of 17% with the revenue reaching INR 72 crores. This growth was driven by steady power sales from the PCMC WTE, ramp-up of our CIDCO biomining project and revenue from a C&D waste processing entity. These results highlight our integrated waste management strategy, blending operational excellence with strategic infrastructure investments, which are now started delivering consistent returns. The group reported an EBITDA of INR 62 crores for the quarter, representing a robust 12% Y-o-Y growth with margins at 24%, in line with the company's expectation. The PAT for the quarter was INR 23 crores, which is a growth of 8% as compared to Q1 FY '25. As of June 2025, the group's gross debt stood at approximately INR 448 crores. Cash and bank balances of around INR 87 crores, results in a net debt of approximately INR 361 crores. This indicates a net debt-to-equity ratio of 0.4x. The group's weighted cost of debt is approximately 9.2% and our day sales outstanding remained stable, which ended at the quarter at 114. Our robust track record, coupled with trusts and municipalities places backed by strong and improving Swachh Bharat ranking of the cities that we operate in positions us well to capture emerging opportunities in the fast-evolving municipal solid waste sector. With all these efforts combined with a resilient business model, a disciplined execution and a committed team, we are confident in our ability to deliver sustainable growth and long-term value to our stakeholders in the quarters ahead. This concludes our remarks. We would now like to open the floor for Q&A. Thank you.

[Operator Instructions] The first question comes from the line of Gaurav Gandhi from Glorytail Capital Management.

Congratulations on a good set of numbers. Just 1 question. Sir, as we have achieved good success in PCMC waste-to-energy plan, and government also focusing on such energy projects. Are there any more such opportunities visible?

Yes, we are definitely looking at WTE to be the next growth focus for the company. There are a few tenders which are already out. We have already participated in a few of them. We expect that results to be declared shortly. So we will be able to get back on that growth path.

[Operator Instructions] The next question comes from the line of Bhavya Gandhi from Dalal & Broacha Stock Broking.

Yes. Sir, just wanted to understand which are the upcoming projects whose revenue we've still not booked in. And historically, we've been guiding for a 25% CAGR. But in last 2 to 3 years, we have not seen that number coming across. So if you can just maybe provide some light on that front.

Yes, Bhavya. So we have bid for a few projects. A few of them are from the southern parts of the country and 2 of them are from the western part of the country. We would not like to name the project since they are in the bidding process. Going back to our guidance of 25% CAGR growth, that's spread over 4 to 5 years. So if you look at the numbers from 2022 onwards, we have been able to grow our revenue from INR 600 crores to around INR 900 crores, and we would be likely to show positive trends once the new projects that we bid for gets into the billing cycle for us. So the numbers that are shown today, for example, the Q1, our core operating revenue growth of 13%. Those are all from contracts that's already been executed today. There are no upcoming projects, revenue, which has been baked into those numbers. So any future growth, which are confident to bag will help us achieve the target that the management set itself for.

Sure. And are there any contracts which are going to expire in the current revenue that we have already put in? Just wanted to get some understanding or flavor for next 2, 3 years. I understand that new contracts are underway, but from the existing ones, are there any contracts which are going to expire?

There is one contract which we are executing in the city of Mumbai. This is a collection and transportation contract, which contributes to not more than 3% of the console number. So that is expiring by December 2025. But the new tenders are already out, we have already submitted our bid stage for that.

Any quantum you can provide on the newer tenders? What size are we looking out for? What would be the ROC and some metrics if you can provide?

The size would be similar to the ones that's expiring or slightly more given the fact that all of them are expecting higher amounts of capital employment. And the return metrics would be equal, if not better, than what we already have in our books.

Okay. Fair enough. And sir, on the construction debris, how much has been the revenue booked in this quarter, if you can provide some numbers?

This quarter is soft because it's monsoons. So we don't see significant traction coming in the second quarter -- first quarter part and till the month of July. So the numbers are very soft. It won't be more than INR 8 crores from my estimate because of the tonnage that's been shipped is very low. We expect tonnages to improve from the end of second quarter till the end of fourth quarter. That's the seasonality in the C&D business.

Got it. The risk that we envisage from the Mumbai waste processing facility that we have if the stay order gets removed, what would be the risk -- inherent risk, if at all, one has to shift this location?

So from the tenders condition, the risk was a concessionaire that is Antony subsidiaries is almost 0. The reason is 0 because the -- if the tender kind of absorbs us as an operator from the risk related to the usage of land because that is under the purview of BMC and Maharashtra government. So from a risk perspective, the answer is this. From -- the land has to be identified for fresh waste processing, we would have to move the assets to the fresh lands, the cost involved in moving our assets to the fresh area will be borne by BMC and refunded to the company. So the cost of movement, the cost associated with the time delay and loss of profit are all captured in the existing tender.

Got it. And sir, just last thing on the EBITDA guidance, if you can provide -- historically, you've been saying 25% odd levels. You can still guide for next 2, 3 years, what is the broad number that one should walk out with?

I think we are -- over the last 3 quarters, we have been able to capitalize a slight increase in EBITDA margin. We are now at the last 6 quarter high EBITDA number on the reported front. So we would like to go with the same number for now for the next 2 to 3 quarters before we bag any significantly large contracts. So 23% to 23.5% EBITDA margin is something that is there for us.

[Operator Instructions] The next question comes from the line of Neerav Dalal from MIB Securities India.

I would just want to continue with the Kanjurmarg, High Court, Supreme Court ruling or stay. But -- so I believe that, that contract would be material to our operations at the moment. So any change there, though it might be part of the contract, but wouldn't it have a material impact on the operations of the company? And what are the remediation measures that we would be taking?

So let me put things into perspective. Now if you look at the Kanjurmarg facility, that's the only facility for the entire city of Mumbai, which can handle 6,500 tonnes of waste a day. So if you were to ask and move by the High Court's order of shutting it down, the first question that has been raised is where will this waste go. And to answer the Supreme Court Chief Justice asked [Foreign Language]. So that is the response which nobody has today. So the plan of action from BMC and from Maharashtra government is to get those ruling out and kind of [indiscernible] the High Court order and also try a remedy de-notification order that was erroneously passed. So that is on the existential portion of Kanjur as a waste processing site for the city of Mumbai. B, as operators of the site, we are kind of absorbed from the entire issue mainly because we are an operator in a land, which has been assigned to handle waste by the client. So tomorrow, the client is forced to shift the operations to some other site, till that day we will continue doing the operation, which is witnessed by the facts of the matter the way it is today. And the day the corporation identifies a new land, we have move our operation to that new site and for which all costs will be refunded by the client to us. So from a cash flow point of view, from a revenue point of view and from a liability and a risk point of view, everything is hedged completely end to end. So we don't see any risk to our project over here.

Okay. Got that. My second question was [indiscernible] also come out with another biomining project where -- is there any specific reason why we did not participate in that contract? Or is it because the margins were lower? If you could just elaborate on that?

You're referring to the one which was awarded in Deonar and backed by a company called Navayuga Engineering, right?

Yes.

Yes. So the contract specifications were too stringent one. Second is we technically didn't qualify because one of the main condition is the company should have handled 18.5 million tonnes of waste in 3 to 4 years, which we have not done. So technically, we were not qualified, neither had we have the experience of moving earth or soil of that magnitude in our experience. So on technical parameters, we were not being able to breach the mark. Neither would be formed a JV to achieve the same because the tender didn't allow JVs to be formed. So on technical parameters, we were not able to qualify for that contract. And also on operational side note, 18.5 million tonnes to be biomined in 3 years, including monsoon effectively means 20,000 tonnes of waste to be biomined from the city center and shipping it out it required a large amount of focus which we felt, a we didn't qualify on the tender aspect; and b, we felt it at the price that it was granted and the costing worked out, we found it to be suboptimal.

So just for an example, the CIDCO project, what would be the size of that?

The CIDCO project is 1.4 million tonnes.

It's 1.4 million tonnes over 3 years?

Over 2 years.

Over 2 years. Okay. The other question I had was on this -- the EPR thing that you've spoken about for the Pune project. If you could elaborate, is the amount material to the scheme of things? Or how should one look at it? That is number one. The number 2 is -- so RDF and Compost, where would those revenues sit? And what would be the percentage of that? So if you could just elaborate on these 2?

Right. On the EPR aspect, it is not material at the consol level, but it's definitely material at the operating company level, which is Antony Lara renewables, which is an entity which is executing the PCMC WTE. It definitely adds to the EBITDA profile and it will be a slightly material amount going forward. On the sale of recyclables like Compost and RDF, that would sit in our other income line. And today, they contribute to close to 4% of our consol revenue, which was 0.2% last -- to last year, which has increased to 2.3%. Now it's around a shade below 4%.

Okay. But it will be part of the other income and not the contract and other...

Yes. No, no. It won't be part of the other contract.

Okay. And lastly, have we seen a decline in debt in this quarter? Have we...

Yes, we have repaid close to INR 60 crores of debt from March onwards till June. That is part of the normal procedural aggressive debt repayment policy that we adopt. So we have repaid close to INR 62 crores of debt in the first quarter of the financial year.

Yes. Correct. Because yes, it has come down to INR 448 again some -- more than INR 500 crores last year -- at the end of last year, got that.

[Operator Instructions] The next question comes from the line of [ Prachi Sharma ] from [ AC Investors ].

Just 2 questions. One that we've been talking about vehicle scrapping and tire recycling business for quite some time now, just wanted an update what are your views? What are we doing on that front? And secondly, if I just go ahead with the question. Also, we are planning to reduce our C&T contribution and increasing the processing contribution. Any actions that we are taking anything over there?

Yes, Prachi. So to answer your first part of auto scrapping and the tire recycling, we are definitely working on those parameters. We have already given a market study report. We have started scouting the areas. And we see, currently, that's a management view that we would like to go slightly slow on that given the market maturity at this point of time. But we expect to work on these parameters as one of the broad management views to derisk the business model by getting into the nonmunicipal revenue. So those 2 parameters of auto and tire recycling are definitely still under consideration by the management. The pace of growth and focus would be slightly slower given the market opportunities, the way it is today and the margin profile the way it has been exhibited by the existing players. On the aspect of growing our processing component versus the C&T operation. If you look at our Q1 '26 numbers, we have definitely seen an increase in the profile of revenue generation from processing versus C&T. If you look at last year's performance, we were looking at 60% -- sorry, 59% and 26% on processing. Now that -- the processing is now contributing to 28%, which has been a slight increase over those parameters and C&T is remaining flat. So the largest chunk of growth is coming from processing contracts for the company in the current financial year as compared to last year.

Understood, sir. Sir, on the first question, you want to comment on any timelines here?

So there's no point talking about timeline till the time the company has a viable project, which can be scalable. I mean as a waste management company, our focus continues to remain in MSW space, given the fact that, that's still the need of our and that gives us a double-digit EBITDA margin and a single-digit PAT margin. We are not able to replicate the same profile in the nonmunicipal business today. So our growth focus continues to remain in MSW, but we are always scouting for opportunities. Till the time we are convinced internally with this profile of nonmunicipal businesses commensurate to the return of -- on a rupee basis for our existing business, we would like to be very cautious before spending money into a project for which we are not convinced about it.

[Operator Instructions] The next question comes from the line of Amit Agicha from HG Hawa.

Sir, my question is -- this Faisal Hawa here. My question is with regards to our project in Pune. So you feel that the [ PLI ] can further go up and what effect would it have on our EBITDA?

So the PLF for the first quarter was 84%. I mean that's softer mainly because we took 11 days of planned maintenance shutdown. So normally, if you look at an average PLF that we are targeting, it should be upwards of 88% to 90% is what we look at. But normally, that will always be a planned maintenance shutdown because of the fact of feedstock and repairs and maintenance, that is as per the norms given by Hitachi Zosen for us. So any significant improvement in EBITDA would be offset by planned maintenance shutdown. But if I say, if I were to look at a PLF of 90% versus 84%, there will be at least a 250 to 300 bps expansion in my EBITDA of that particular operating asset.

What did you say about -- would be the 300 percentage points?

Yes. 300 bps, If the PLF improves from 84% to 90%.

And sir, we have been promising around 24%, 25% CAGR. I know that it is over a period of 3 to 4 years. But of late, the growth, at least in the sales has been a little anemic. So what are the steps that management is taking to address those?

So Mr. Hawa, what the management has done is that we've been very acutely looking at new contracts that's being put up for bidding, and we are definitely putting our hat in the race on those contracts, which ensure that the profitability and the margins and the client profile, I mean, you should remember that we work in municipal solid waste business. So we don't want to swing at each and every order that's been put on the bidding stage. So we are very conscious. We have been working with few municipal corporations, and we are actually actively chasing few projects, which we feel will help us achieve the targets that we have set ourselves, which we also communicated to all the stakeholders. So we are working towards achieving these numbers, and we will be able to give you some more color in the current or the next quarter.

Is it a right statement to make that at least in biomining now we will be one -- amongst the most recognizable players, and we should be able to get even more contracts there?

In the biomining space, we are definitely one of the serious contenders for any new projects. The only limiting factor for a biomining project is the corporation's budget allocation for that activity and the availability of low-lying area to get rid of the rejects of soil, which are -- which cannot be sold otherwise. So to answer your question, yes, we are very serious and a large contender in the biomining space in India, and viability of the project is on a case-to-case basis.

[Operator Instructions] The next question comes from the line of Neerav Dalal from MIB Securities India.

Very quick one. So for the current year, say, for fiscal year '27, we would maintain a 4% to 6% volume growth and then another 3% to 4% value growth. Would that be a right assumption? Or there are certain contracts which are not at the moment, fully operational? So if you could just give us some indication on that?

So Neerav, on the existing profile, I mean, we have already shown a 13% corporate -- core operating revenue growth on the same platform. So on a year-on-year basis, 8% to 10% growth is something that is baked in the numbers the way it is stacked today. We expect the volumes at the construction and demolition waste to move upwards from the end of second quarter onwards. So that will be the positive flip to the numbers to help us achieve those kind of targeted revenue growth.

Okay. So but -- so it would not be wrong in saying that, okay, an 8% to 10% growth. So we did 13% for this quarter. But...

So we have been conservative here given the fact that the existing [ RCRM ] contract, the one in -- [ MCGM ] C&T contract, which is expiring in December. So I'm not including the last quarter revenue over there, just been conservative over here when we give these numbers. So definitely, that will be an uptick when the new project kicks in. So that will kind of more than compensate us to and achieve these numbers that we have stated ourselves for.

Got that. Got it. So one can say that the current quarter performance could be something that one can look ahead for the full year in terms of revenue growth and margins?

Yes.

[Operator Instructions] As there are no further questions from the participants, I now hand the conference over to Mr. Subramanian NG for closing comments. Thank you, and over to you, sir.

Thank you. I would like to take a moment to thank our dedicated team for the incredible contribution to our success. The tireless effort has been essential in achieving our goals, and we will continue to build on the momentum. We are committed to investing in innovation and leveraging our expertise to strengthen our market position and ensure that our clients, Swachh Bharat ranking remain the way they are or at least improve on the base of what they have achieved. I'm particularly excited about our WTE's section, which is showing all kind of promises and growth going forward. Thank you, and wish you all a very pleasant evening ahead. Thank you.

Thank you. On behalf of Antony Waste Handling Cell Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.