![New plastic waste management rules to benefit ITC, hit Nestle and Britannia: Kotak Equities](https://img.etimg.com/thumb/msid-109887457,width-210,height-158,imgsize-22708,resizemode-75/new-plastic-waste-management-rules-to-benefit-itc-hit-nestle-and-britannia-kotak-equities.jpg)
The new rules, which could put India ahead in the global league in terms of handling plastic waste problems, will increase the packaging costs of consumer staple companies, Kotak. On the other hand, plastic recyclers and innovative packaging companies such as Ganesh, EPL, Uflex and ITC, which can provide solutions for making plastic recyclable, develop products using post-consumer recycled material (PCR), and offer economical alternatives to plastics, will be the key beneficiaries of the roll-out of the new rules.
India will implement the mandatory norms for the recycling and reuse of recycled content for producers, importers and brand-owners of plastic packaging in a phased manner from FY2025. The new rules are a part of the Plastic Waste Management (Amendment) Rules 2022 (PWM), which aim to boost secondary plastic markets by enacting new norms to create a circular plastic economy and address the rising concerns about plastic pollution.
Kotak sees Colgate and Nestle getting impacted the most among companies in its coverage as the regulations will have a higher impact on the food and oral care segment and products that require the use of transparent packaging which requires higher-quality of recycled plastic packaging material. This trades at a 40-50% premium to virgin plastic.
The packaging costs of companies in the consumer staples universe are in the range of 5-13% of their revenues with a high exposure to plastic given its unique value proposition. Dabur reported the highest packaging cost at 12.5% of its standalone revenues in FY2023.
Kotak's recommendations:
Britannia Industries: ADD |Target: Rs 5,225 | Upside: 10%Colgate Palmolive: REDUCE | Target: Rs 2,425 | Downside: 13%
Nestle: ADD | Target: Rs 2,550 | Upside: 4%
ITC: ADD | Target: Rs 460 | Upside: 5%
Also Read: Marico Q4 Results: Consolidated PAT rises 5% YoY to Rs 320 crore
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2024 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)
Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.
Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price