Gravita gains 4% as Axis Securities initiates coverage with 'Buy'; Details

Analysts at Axis Securities believe that Gravita is well-positioned to capitalise on the burgeoning recycling industry, driven by global shifts toward sustainability and circular economies

Gravita India shares zoom: Gravita India's stock gained traction on Wednesday, rising 4.18 per cent to an intra-day high of Rs 2,600 on the NSE. The surge was accompanied by robust trading volume, with 2.72 lakh equity shares worth Rs 69.90 crore changing hands.

The rally was sparked by Axis Securities' initiation of coverage on Gravita India with a bullish outlook.  Analysts at Axis Securities recommended investors to buy Gravita India shares with a target price of Rs 3,000 per share, indicating a potential upside of 20 per cent from the previous day’s closing price, and around 15.38 per cent from today’s intraday high.

Analysts believe that Gravita is well-positioned to capitalise on the burgeoning recycling industry, driven by global shifts toward sustainability and circular economies. With planned capacity expansions and diversification into newer verticals, analysts said, the company is set to benefit from favourable industry dynamics and rising demand for sustainable solutions.

“We are confident in Gravita’s potential, attributing our BUY rating to its dominant market position, improving profitability, favourable regulatory landscape, and diversified offerings. The stock currently trades at a reasonable valuation, and we project a target price of Rs 3,000/share based on a 37x FY27E EPS multiple, highlighting the significant upside of 20 per cent from the CMP,” said Axis Securities in a note.
 

Meanwhile, here are the top factors for initiating the coverage:

Growing domestic and global recycling market 

The global recycling market is on an accelerated growth trajectory, fueled by advancements in technology and increasing regulatory pressures. Analysts believe that despite being fragmented and underdeveloped, the industry presents significant opportunities for organised players like Gravita..

Conducive regulatory environment

According to analysts at Axis Securities, the global push for recycling is gaining momentum, supported by initiatives such as Extended Producer Responsibility (EPR) and incentives under the Battery Waste Management Rules (BWMR). These regulations not only encourage recycling but also aim to formalise the sector, providing organised players like Gravita with a significant competitive advantage. Analysts believe that such regulatory support is expected to facilitate volume growth and improve resource utilisation, benefiting companies with established recycling capabilities.

Well-spread crap collection and production network

 Gravita operates a robust global network with 11 manufacturing plants in 32 countries and over 250,000 MT of scrap collection capacity. Analysts opined that the company’s efficient scrap collection system, supported by dedicated yards and numerous touchpoints, enables effective service delivery to OEM customers while optimising logistical costs. 

Newer Segments to boost growth

Under its ‘Vision 2028’ strategy, Gravita aims to diversify beyond traditional recycling into lithium, steel, and paper recycling. Analysts expect this strategic expansion to enhance revenue growth and improve cash flows significantly. The company targets achieving over 30 per cent non-lead business contribution, 25 per cent volume Compound annual growth rate (CAGR), and 35 per cent profitability CAGR, showcasing its commitment to robust future growth, said analysts at Axis Securities.

At 11:50 AM, shares of Gravita India were trading 2.92 per cent higher at Rs 2,568.35 per share on the NSE.