The metal recycling and lead manufacturing industry plays a vital role in sustainability efforts, recycling approximately 150 million metric tons of metal annually. Lead manufacturing, a significant component, generates over 11 million metric tons yearly, supplying various sectors such as construction, automotive, and electronics. This industry fosters environmental responsibility while meeting the global demand for metals.
With a market capitalization of Rs 6,674.24 crore, on Saturday, the shares of Gravita India Ltd were trading at Rs 966.75 per share, increased around 0.66 percent as compared to the previous closing price of Rs 960.45 apiece.
Looking into Gravita India’s performance, revenue increased by 15 percent from Rs 749 crore in Q3 FY23 to Rs 863 crore in Q3 FY24. During the same period, net profit increased by 8 percent, from Rs 64 crore to Rs 69 crore.
ICICI Direct, one of the well-known brokerages in India, gave a ‘Buy’ call on the metal stock with a target price of Rs 1,345 apiece, indicating a potential upside of 39 percent from Saturday’s closing price of Rs 966.75 per share.
Here is the rationale behind the bullish potential upside of 39%:
● GRAV has achieved record high revenue, EBITDA, and PAT for both, Q4FY24 and FY24 of Rs 8.8bn /929mn / 690mn, up 15% /9% /8% YoY and 16% /13% / 14% QoQ. Total volumes rose 14% YoY/18% QoQ to 47.4kt, with lead growth strong at 25% YoY to 40.6kt.
● Tanzania’s battery recycling capacity has increased by 5,000MT, totaling 12,000MT. The extension cost Rs33mn and was funded through internal accruals. GRAV has established plastic/rubber recycling projects in Tanzania, with capacities of 1,800/3,000MT and a capital of Rs22.5/Rs38.6 million.
● GRAV’s Vision 2028 aims to diversify into new verticals, including lithium-ion, steel, and paper. The company aims to achieve a revenue CAGR of >25% and a PAT CAGR of >35% while maintaining a ROCE of 25% and increasing the non-led business to over 30%. Furthermore, GRAV seeks to raise the share of VAP to 50%. Vision 2028 is similar to Vision 2027 but with an emphasis on ESG.
● GRAV has notified Aluminum Alloy (ADC12) under the SCR Act, anticipating its derivative launch on MCX by Q2FY25. This move is expected to boost aluminum capacity utilization, with the FY25 exit rate projected at 65-70%. The company plans to expand
its aluminum capacity, focusing on Ghana, leveraging this opportunity for growth. Gravita India Ltd is a major lead manufacturer in India. The company’s operation is divided into four specialized verticals: lead recycling (flagship), aluminum recycling, plastic recycling, and turnkey projects. The firm also specializes in the recycling of spent batteries, cable scrap/other lead scrap, aluminum scrap, plastic scrap, and more.
Written by:- Abhishek Singh
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