3 Stocks Seen To Benefit From Single Use Plastic Ban

With every economic development there are some associated companies which can react to the move. Likewise, as per notification by the Ministry for Environment, Forest and Climate Change, "The manufacture, import, stocking, distribution, sale and use of following single-use plastic, including polystyrene and expanded polystyrene, commodities shall be prohibited with effect from the 1st July, 2022", there shall be a ban on single-use plastic.

What is single-use plastic and why the ban?

Single use plastic as the name suggest are one-time use plastic items that are often not discarded properly and hence not recycled. The ban has been proposed as plastic turns out to be the biggest source of pollution in the country. It cannot be burned as it then releases harmful gases and toxic fumes. Also, it does not decomposes that means that all plastic that has ever been manufactured and has ended in the system is still present in one form or another. So, as it is hazardous for the environment as a whole, government of India has considered banning it.

Further as the Central Pollution Control Board (CPCB), government body under the Ministry of Environment, has come forth with the list of plastic items that will be put on ban from July 1, 2022, here are few companies seen to benefit from the move.

 

1. EPL:

EPL is a small cap company that is the world's largest speciality packaging company. The company with global presence partners with top FMCG companies globally. Previously called Essel Propack is a producer of plastic packaging material in the form of multilayer collapsible tubes and laminates used primarily for packaging of toothpaste, personal care, cosmetics, pharmaceuticals, household and industrial products.

The company aiming to be the most sustainable packaging company in the world is seen to benefit from the single-use plastic ban.

In the Fy 2022, the company's total revenue inched higher YoY to Rs. 3444.8 crore, nevertheless, its net income took a hit and declined to Rs. 214.4 crore as against Rs. 239.1 crore in Fy21. Fundamentally, the stock is valued reasonably and has a low debt.

 

2. Uflex:

The company is the country's largest flexible packaging company, and a global leader in polymer sciences. The company is capitalising on the directive and as per the latest news has set up a plant deploying technology from the Netherlands using which it shall produce 6 billion paper straws on annual basis that shall serve as an alternative to plastic based straws.

The company commands a high Piotroski score i.e. has strong financials. For the Fy22, the company's revenue as well as net income scaled higher to Rs. 13,236.79 crore and Rs. 1098.26 crore, respectively. Also, it has a manageable debt on its books of Rs. 1247 crore.

 

3. TCPL Packaging:

TCPL Packaging is one of India's largest manufacturers of folding cartons, and India's largest standalone converter of paperboard. The company produces folding cartons, printed blanks and outers, litho-lamination, plastic cartons, blister packs and shelf-ready packaging. TCPL is also an innovative player in the flexible packaging industry, with the capability to produce printed cork-tipping papers, laminates, sleeves and wrap-around labels. The company is also spending in pioneering novel technology to offer environment sustainable packaging solutions.

The scrip's financials also hold promise with good profit growth of 18.61% for the past 3 years. The company has an efficient conversion cycle and also a high promoter holding. Nonetheless, it is reported to increase its debt with debt to equity on the higher side at 1.18.

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