During Wednesday’s trading session, the shares of a leading recycling company surged 2.5 percent to Rs. 2,348 on BSE, after the company announced entering into a Memorandum of Understanding (MoU) to acquire a rubber recycling plant in Europe.
With a market capitalisation of Rs. 15,465.5 crores, the shares of Gravita India Limited opened in the green at Rs. 2,329.95, up by 1.7 percent, as against its previous closing price of Rs. 2,290.5.
What’s the News:
According to the latest regulatory filings, Gravita Netherlands BV (GNBV), a step-down subsidiary of Gravita India, signed a MoU to acquire a waste tyre recycling plant in Romania from an existing entity based out in Romania having a capacity of nearly 17,000 MTPA.
The target entity, Access Auto Trading SRL, has been engaged in trading and recycling of waste tyres in Romania since 2010 and has a turnover of around Rs. 80 crores. This plant will be Gravita’s first recycling facility in Europe.
The acquisition will be executed by forming a separate Special Purpose Vehicle (SPV) in Romania, in which, GNBV will hold an 80 percent equity with management control in the said SPV, while the remaining equity will be held by local partners based in Romania.
Instead of acquiring the entire entity, GNBV will purchase the fixed assets, including land, building, plant, and machinery of Access Auto Trading SRL by forming a separate SPV in Romania.
The total investment in this transaction is projected to be around Rs. 40 crores, with GNBV contributing nearly Rs. 32 crores. The acquisition is expected to be completed within 12 months.
If the investment exceeds 2 million euros, FDI approval from the Government Authorities of Romania will be required.
Financials:
The company experienced significant growth in its revenue from operations, showing a year-on-year rise of around 29 percent from Rs. 703.4 crores in Q1 FY24 to Rs. 907.8 crores in Q1 FY25.
Similarly, its net profit increased during the same period from Rs. 52.5 crores to Rs. 68 crores, indicating a rise of nearly 30 percent YoY.
Gravita India targets new recycling verticals by 2028, focusing on Lithium, Steel, Rubber, and Paper. The company aims to achieve over 25 percent CAGR in volume, increase profitability by more than 35 percent, and reach a Return on Capital Employed (RoCE) of over 25 percent.
In FY24, the company’s total capex stood at Rs. 98 crores, and has set a target of over Rs. 600 crores capex by FY27, covering both existing and new verticals.
As of FY24, the company’s total capacity stood at 3.02 lakh metric tonnes (MT), and plans to increase this capacity by over 5 lakh MTPA by FY27.
Stock Performance
In the previous six months, the stock has delivered multibagger returns of nearly 163.4 percent, while around 180.5 percent in the last one year. So far in 2024, it has given about 105.7 percent of multibagger returns.
About the Company:
Established in 1992, Gravita India Limited is engaged in the business of manufacturing and recycling of lead, aluminium and plastics.
The principal activities of the company are lead processing, aluminium processing, trade (lead products and aluminium scrap) and dealing in turn-key lead recycling projects. Further, the company has also entered into PET product manufacturing.
Written by Shivani Singh
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