Target: ₹2,389
CMP: ₹1,364.85
In Q1 FY26, Ganesha Ecosphere Ltd (GESL) reported muted revenue growth of about 0.2 per cent on a year-on-year (y-o-y) basis. The standalone legacy business recorded a 9 per cent revenue decline, impacted by sluggish demand in the textile sector and a sharp increase in raw material prices, which limited the company’s ability to pass on cost escalations.
This led to margin pressures, with EBITDA margin contracting 348 bps/ 372 bps on a y-o-y/quarter-on-quarter (q-o-q) basis respectively. Sales volume declined about 8 per cent on a y-o-y basis, driven by a 14 per cent drop in the legacy business, partially offset by around 10 per cent increase in volumes from the subsidiary business (primarily B2B chips).
Reflecting the weak operating environment, the management has revised its FY26 revenue guidance from ₹1,750 crore to ₹1,500 crore.
With its dominant position and early-mover advantage, GESL has scaled up capacity while improving output quality. The legacy business remains under pressure from weak textile demand, but we expect the company to overcome near-term challenges and deliver revenue and sales volume growth of 21 per cent and 16 per cent respectively, through FY28E.
Accordingly, we have revised our estimates and maintained a Buy rating on GESL. We value the stock at 35x P/E on FY28E EPS, implying an upside potential of around 80 per cent with a target price of ₹2,389.
Published on August 20, 2025
