Gravita India soars 15% amid heavy volumes on healthy outlook

The stock has zoomed 72 per cent from its June 04 low; Company's management has shared an ambitious growth plan - 'Vision 2028'.

Shares of Gravita India hit a new high of Rs 1,581, as they soared 15 per cent on the BSE in Friday’s intra-day trade amid heavy volumes in an otherwise weak market. The buying at the counter was attributed to a healthy business outlook shared by the company. In the past 12 trading days, the stock of one of the largest recycling companies in India has zoomed 72 per cent from a level of Rs 917 touched on June 4.

At 11:23 AM; the stock was trading 13 per cent higher at Rs 1,550, as compared to 0.39 per cent decline in the BSE Sensex. The counter saw huge trading volumes, with a combined 3.26 million shares representing 4.7 per cent of total equity of Gravita India changing hands on the NSE and BSE.

Gravita India is engaged in manufacturing and recycling of lead, aluminium and plastic products.

The management has set an ambitious growth plan called Vision 2028, to diversify into lithium-ion, steel and paper recycling; achieving revenue a compound annual growth rate (CAGR) and profit growth of 25 per cent+ and 35 per cent+ along with increasing the contribution of value-added products and non-lead business to 50 per cent+ and 30 per cent+ .

Gravita India clocked lead volume growth of 25 per cent year-on-year (YoY) in Q4FY24, despite Red Sea challenges, and guided to 25-30 per cent YoY growth in consolidated volumes for FY25E.

The increasing demand for batteries from electric vehicles and energy storage systems is anticipated to augment market growth. Lead is the only metal that can be recycled several times without having any diminishing impact on its quality. As a result, the production of secondary (recycled) lead is increasing over primary, which is anticipated to have a positive impact on market growth, the company said.

Over the past five years, Gravita has maintained revenue CAGR of 21 per cent and a PAT CAGR of 74 per cent. Management expressed confidence on achieving the targeted growth, with optimism for even higher revenue growth rates. The minimum revenue growth projection for FY25 stands at 25 per cent.

The company highlighted progress on the regulatory framework (BWMR norms, EPRs, etc), with MCX approval expected by Q2FY25 for listing of ADC12 (core AL alloy) to enable AL exposure hedging. The management anticipates paper/steel recycling facilities to start by FY26/27, besides the capex on Li-ion recycling starting FY25, analysts at Emkay Global Financial Services said in the Q4 results update. The stock however is trading above brokerage firm’s target price of Rs 1,345 per share.