RMIL deal, policy support keep Gravita India in Mirae Asset's bullish lens

Brokerage firm Mirae Asset Sharekhan has reiterated its ‘Buy’ rating on global recycling player Gravita India, citing strong growth prospects driven by rising scrap availability, supportive regulatory policies, increasing demand from the electric vehicle (EV) segment, and the company’s expansion into value-added and copper recycling businesses. 

The brokerage has maintained its target price at ₹2,000 (28x FY28E EPS). At the current market price of ₹1,594, the stock trades at 33x/27x its FY27E/FY28E earnings estimates. 

“For Gravita, the rising supply of scrap resources, favourable policies, and implementation of Battery Waste Management Rules (BMWR), Extended Producer Responsibility (EPR), and Reverse Charge Mechanism (RCM) will boost output, while the Mundra plant will benefit from the focus on electric vehicles and clean energy,” said the brokerage in its report. 

 

It added that in Q3FY26, Ebitda margins remained robust at over 11 per cent, led by higher revenue in the lead business. Capacity expansions are expected to fuel volume growth from H2FY26 onwards. The company has guided for 8–9 per cent volume growth in Q4FY26 and revenue/APAT CAGRs of around 18 per cent and 26 per cent, respectively, over the long term, while maintaining a RoCE of 18 per cent.  READ | HDFC Securities keeps 'Add' on Tata Elxsi; sees calibrated recovery in FY27

Business updates

Among key developments, the brokerage highlighted the acquisition of Rashtriya Metals Industries Limited (RMIL), the Mundra project expansion, and the launch of lithium-ion recycling operations.

1. RMIL acquisition: Gravita has acquired RMIL, one of India’s oldest copper manufacturers, for ₹565 crore. RMIL clocked a turnover of ₹910 crore in FY25. The deal marks Gravita’s entry into the copper recycling segment and will take its total copper capacity from 334 ktpa as of FY25-end to 340 ktpa, including RMIL’s 31,200-TPA facility in Gujarat. An additional 45 ktpa capacity is set to be commissioned this quarter, with both projects expected to be fully operational by Q2FY27. 
2. Mundra project: The company has expanded its lead recycling capacity by 80,300 TPA to 145,100 TPA, using internal accruals of ₹49 crore. "The expansion would bolster its recycling capabilities in the long run, helping  it to cater to rising demand for sustainable  lead products," said the brokerage. 
3. Li-ion recycling: Gravita has launched a 6,000-TPA lithium-ion battery recycling plant at Mundra with an investment of around ₹14 crore. The move reflects the company’s strategy to reduce dependence on mining for raw materials and ensure reuse of valuable materials.

READ | Emkay Global raises Karur Vysya Bank target on strong RoA, loan growth 

Key risks

The brokerage, however, has also flagged regulatory tailwinds on scrap procurement and highly volatile global aluminium prices as key risks. Any tightening in scrap availability could impact procurement and processing volumes, it said.  ===================================== 

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