Synopsis: Gravita India is a robust, recycle MOATed enterprise that presents a robust future alternative for wealth creation. It laid a big future outlook for its enterprise.
Gravita India is a number one world recycling firm specializing in lead, aluminum, plastic, and rubber segments. It turns waste lead, aluminum, plastic, and rubber into usable industrial merchandise, supported by 12 crops and operations throughout a number of international locations.
With a market capitalization of Rs 12,860 crore, the shares of Gravita India Ltd closed at Rs of Rs 1740.90 per share, up 1.4 p.c from its earlier day’s closing worth of Rs 1716.75 per share. Over the previous 5 years, the inventory has delivered a multibagger return of three,441 p.c, outperforming NIFTY 50’s return of 104 p.c.
Q2 Highlights
Gravita India reported a core income of Rs 1,036 crore in Q2 FY26, a progress of 12 p.c as in comparison with Rs 927 crore in Q2 FY25. Nonetheless, on a quarter-on-quarter foundation, it declined barely by 0.4 p.c from Rs 1,040 crore.
On the working revenue entrance, it reported an EBITDA of Rs 102 crore in Q2 FY26, a progress of 62 p.c as in comparison with Rs 63 crore in Q2 FY25. Moreover, on a quarter-on-quarter foundation, it grew barely by 1 p.c from Rs 101 crore. On a YoY foundation, its margins additionally expanded by 300 bps in Q2 FY26.
Concerning its profitability, it reported a internet revenue of Rs 96 crore in Q2 FY26, a progress of 33 p.c as in comparison with Rs 72 crore in Q2 FY25. Moreover, on a quarter-on-quarter foundation, it recorded a progress of solely 3 p.c from Rs 93 crore.
Throughout the second quarter of the monetary 12 months 2026, Gravita India skilled a combined efficiency of EBITDA per MT throughout the segments. The Lead phase was the principle contributor to the rise because it went up from Rs 21,642 to Rs 23,196, which is a transparent indication of upper spreads and good demand. Quantity for this phase grew by 5 p.c YoY.
Whereas Aluminium misplaced plenty of its worth and went down from Rs 18,386 to Rs 14,786, suggesting that the corporate is affected by margin strain. The Plastic phase has been virtually the identical; it has gone down a bit from Rs 10,497 to Rs 10,122. Quantity for the Aluminium and Plastic phase declined by 20 p.c and 4 p.c respectively.
Future Outlook
Gravita India’s Imaginative and prescient 2029 is a transparent assertion of intent for the corporate to increase aggressively, with a give attention to new recycling verticals equivalent to lithium, metal, rubber, and paper, and steadily transfer away from conventional lead operations.
The corporate is taking a look at a quantity CAGR of greater than 25 p.c, a profitability progress of greater than 35 p.c, and a robust ROIC of over 25 p.c, thus indicating its intention to develop quickly however on the identical time hold the returns at a excessive degree.
The worth-added merchandise, that are anticipated to account for greater than 50 p.c of the income, and the non-lead companies are anticipated to contribute over 30 p.c of whole income, would be the two main sources of the corporate’s progress. As well as, the corporate is dedicated to lowering its power consumption by greater than 10 p.c and utilizing renewable energy for greater than 30 p.c of its wants with the intention to promote sustainability.
All in all, the corporate’s priorities are a smart use of capital, the creation of shareholder worth, and progress that will increase the return, thus making Gravita a recycling chief who’s diversified and prepared for the longer term by 2029.
Gravita India has outlined a complete capex of round Rs 1,225 crore by FY28, reflecting its push to scale present operations whereas increasing into new recycling verticals equivalent to lithium-ion, paper, and metal. Nonetheless, its capex plans have barely lowered from the sooner vary of Rs 1,500 crore, because it shifted its stance from greenfield to brownfield growth, which is able to save some huge cash for the corporate, signifying sensible administration of its capital.
As a part of this capital expenditure, spending will rise from Rs 98 crore in FY24 to Rs 107 crore in FY25, Rs 206 crore in FY26, Rs 386 crore in FY27, and Rs 632 crore in FY28 alone. Of this whole outlay, Rs 864 crore can be spent towards strengthening its present verticals, whereas the remaining can be used for newer verticals.
This capex push will considerably increase manufacturing capability from the present 3 lakh MT in FY24 to over 7 lakh MT by FY28 throughout lead, aluminium, plastic, and the newly added rubber recycling phase. The rising funding highlights Gravita’s technique to diversify its portfolio, scale high-growth verticals, and construct a multi-material recycling ecosystem over FY28.
Firm’s MOAT
Gravita India has a robust moat as it is vitally exhausting for brand new gamers to enter this enterprise phase, because it has a excessive barrier to entry. The corporate has import licences, OEM approvals, technical experience, and world procurement networks that take years to construct. Its massive community of scrap yards, touchpoints, and long-term buyer relationships offers it precedence entry to uncooked supplies at aggressive costs, a bonus that smaller gamers can’t replicate simply.
On prime of that, Gravita operates throughout 34+ international locations with services unfold throughout Asia, Africa, Europe, and the Americas. This world footprint helps it cut back logistics prices, keep near uncooked materials sources, and serve clients quicker. With 12 recycling crops, excessive capability utilisation, sturdy value-added merchandise, a diversified buyer base worldwide, and a stable order e-book of over 60,000 metric tonnes, Gravita enjoys scale, effectivity, and belief that collectively create a strong and sustainable aggressive edge.
Valuation
At current, Gravita India is buying and selling at a P/E ratio of 35.50x, which is considerably larger than the business common of 21.57x. The corporate’s valuation can be greater when in comparison with its personal historic vary – the P/E ratio averaged over 5 years is 21.8x and over 10 years is 21.7x. Which means that the market is pricing the inventory at a premium, in all probability signalling greater progress anticipations and the corporate’s spreading multi-vertical recycling mannequin.
It’s additionally price noting that Gravita India has a really small quantity of debt and a strong asset base, as indicated by its stable stability sheet. As well as, the agency has been constantly producing constructive money flows from its principal operations during the last seven years. Such constant money circulation and low debt place make the corporate financially safe and allow it to pursue its progress plans over the lengthy run.
Thus, Gravita India appears to be transferring in the direction of a recent progress section very quickly with its growth plans, enchancment in profitability, and diversification into new recycling segments. Nonetheless, the agency path can be decided by the effectivity of the corporate’s execution of the deliberate capex, the dimensions of recent verticals, and margin administration throughout segments over the following a number of years.
Written by Satyajeet Mukherjee
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