Gravita India Ltd – Q3 FY2025 Stock Research Report | Leading Recycling Company Analysis

Gravita India Ltd – Q3 FY2025 Stock Research Report

A comprehensive analysis of Gravita’s financial performance, growth prospects, and investment potential

Company Overview

Gravita India Ltd. is a leading global recycler engaged in processing lead, aluminum, plastic, and rubber across multiple geographies. The company has established itself as a key player in the circular economy, benefiting from increasing environmental regulations and the transition toward sustainability.

Key Financial Metrics (as of Q3 FY2025)

Market Cap

₹12,480 Cr

Current Price

₹1,691

High / Low

₹2,700 / ₹730

Stock P/E

43.6

Book Value

₹126

Dividend Yield

0.31%

ROCE

27.9%

ROE

33.7%

Face Value

₹2.00

Debt

₹559 Cr.

Reserves

₹913 Cr.

No. of Equity Shares

7.38 Cr

Chg in Promoter Holding (3Yrs)

-13.7%

Sales Growth (YoY)

21.3%

Profit Growth (YoY)

22.3%

Sales (TTM)

₹3,695 Cr.

Operating Profit Margin

8.23%

Quarterly Sales Growth

31.5%

Profit After Tax (TTM)

₹286 Cr.

Sales Growth (3Yrs CAGR)

30.9%

Profit Growth (3Yrs CAGR)

61.5%

Promoter Holding

59.3%

Q3 FY2025 Performance Highlights

Revenue Growth: ₹996 Cr, up 31% YoY, driven by increased volumes and higher value-added product contribution.

EBITDA: ₹102 Cr, up 14% YoY, with EBITDA margin at 10.3%.

PAT Growth: ₹78 Cr, up 29% YoY, with PAT margin at 7.8%.

Volume Growth:

Lead: 43,900 MT (+27% YoY)

Aluminum: 6,264 MT (+92% YoY)

Plastic: 3,279 MT (+33% YoY)

Value-Added Product Contribution: 46% of revenue, in line with Vision 2028 of achieving 50%.

Debt Reduction: Raised ₹1,000 Cr via QIP, reducing net debt to ₹600 Cr.

Growth Plans & Planned Expansions

Capacity Expansion:

Targeting 500,000+ MT by FY2027 (Current: 308,000 MT).

New Ventures:

Lithium-Ion Battery Recycling Pilot: First project at Mundra, India, operational by H1 FY2026.

Rubber Recycling: New plant in Romania, expected acquisition in Q4 FY2025.

Aluminum Expansion: 4,000 MT added in Ghana, targeting 8,000 MT soon.

PET Recycling Opportunity: Exploring entry into plastic PET recycling due to EPR regulations.

M&A & Overseas Growth:

Expansion in Dominican Republic, Oman & Romania.

Evaluating M&A in Gulf, Africa, & Europe.

Future Financial Projections

Timeframe	Revenue Growth CAGR	Profit Growth CAGR	ROCE Projection
5 Years	25%	35%	27-28%
10 Years	22%	30%	28-30%
15 Years	20%	28%	30%+
20 Years	18%	25%	30%+

Capital Expenditure & Strategic Rationale

₹2,500 Cr+ investment over 3 years in:

Capacity expansion in lead, aluminum, plastic, rubber, & lithium-ion.

Strengthening overseas presence via acquisitions.

R&D in high-value recycling technologies.

Debt Management:

Short-Term: Reduce debt to near-zero (March 2025).

Long-Term: Leverage for strategic M&A (~₹800-900 Cr).

Competitive Landscape & Risks

Strengths

Largest organized player in lead recycling, strong brand presence.

ESG-compliant operations with global supply chain integration.

EPR & RCM Regulations favoring shift from unorganized to organized players.

Hedging Strategy: Metal price risks mitigated via hedging (Lead, soon Aluminum).

Risks

Geopolitical Risks: Overseas expansion exposes the company to political instability (e.g., Sri Lanka, Mozambique).

Raw Material Sourcing Risks: Any disruptions in scrap availability (e.g., domestic regulatory changes) could impact margins.

Technology Risks: Need to adapt to lithium-ion battery dominance over lead-acid batteries.

Aluminum Hedging Delay: Aluminum margins fluctuate due to lack of hedging options, set to stabilize in FY2026.

Execution Risks: M&A and Greenfield expansions carry integration & scalability risks.

Valuation Estimate

Current P/E: 43.6

Industry P/E (Recycling & Specialty Chemicals): ~40-45

Projected EPS Growth (3Yrs CAGR): ~33-35%

Fair Valuation (FY2026E P/E ~30):

Target Price (12-18M): ₹2,500-2,800

5Y Price Projection: ₹5,500+

10Y Price Projection: ₹12,000+

Investment Thesis

Gravita India Ltd. presents a strong long-term investment opportunity due to:

Consistent Volume Growth: 25% CAGR, supported by new verticals & global expansion.

High-Margin Business: Increasing value-added product mix & economies of scale.

Strong Financials: ROE 33.7%, ROCE 27.9%, debt near zero, supporting further growth financing.

Favorable ESG & Regulatory Tailwinds: RCM, EPR, Circular Economy push enhance long-term demand.

Attractive Valuation: Potential 2x in 5 years, 5x in 10 years based on sustained profit growth & margin expansion.

Final Verdict: BUY for Long-Term Investors

Short-Term (12-18M): Moderate upside (₹2,500-2,800).

Long-Term (5-10Y): Strong wealth creation potential (5x+).

Ideal for Investors Seeking: ESG-driven, high-growth, mid-cap opportunities.

Disclaimer

This report is not investment advice. It is based on publicly available financial data and company disclosures. Investors should do their own due diligence before making any investment decisions.

Gravita India: 5X Growth Potential by 2035