GRAVITA - GRAVITA INDIA LIMITED Share Price

Gravita India Ltd. delivered a steady performance in the first half of FY26, with a revenue of INR 275.44 crores, a growth of 13% year-on-year. The company's EBITDA increased to INR 223.51 crores, reflecting a 16% rise year-on-year, with a strong EBITDA margin of 10.77%. Profit after tax (PAT) stood at INR 189.25 crores, a significant increase of 36% year-on-year. The EBITDA per ton reached INR 23,196 for lead, INR 14,786 for aluminium, and INR 10,122 for plastics.

Management emphasized a net debt-free balance sheet, allowing for continued growth. Installed capacity has reached 340,000 metric tons per annum, with plans to exceed 700,000 metric tons by FY28, underpinned by a realigned capex budget of approximately INR 1,225 crores, of which INR 850 crores is dedicated to strengthening existing verticals.

Key projects include a pilot lithium and battery recycling unit expected to operational by Q3 FY26, alongside expansions in Mundra and Phagi, which are set to add 30,000 and 50,000 metric tons in lead capacity by January 2026, respectively.

Additionally, management aims for a volume CAGR of over 25% and a profitability growth above 35% by FY27, seeking to increase non-lead revenue contribution to 30%. The company remains focused on adopting responsible ESG practices, targeting a 30% share of renewable energy and an energy intensity reduction of over 10%.

Forward-looking, Gravita is awaiting approvals for aluminium hedging from MCX and exploring opportunities in new verticals like rubber and lithium-ion recycling, positioning itself strategically for long-term sustainable growth.

Major Questions and Answers from the Q&A Section of Gravita India Ltd. Earnings Transcript

Question 1: "At what point do we actually upgrade the sustainable guidance range for lead margins, which have been consistently higher than our INR19 to INR20 guidance?"

Answer: "The increase in margins results from improved efficiency and a higher value-added content, currently at 46%, which we aim to increase to around 50%. We foresee sustainable margins of INR19 to INR20 based on our current capacity utilization. While some margins may reach INR23 due to specific conditions or better pricing, we aim to maintain the INR19 to INR20 range as a baseline."

Question 2: "Are we on track to commission lead capacity in Mundra and Phagi? What is the timeline?"

Answer: "Yes, the Mundra capacity of 30,000 metric tons is expected to be completed by November 2025, while an additional 50,000 tons will be added by January 2026. The Phagi capacity is also on track for mid-December 2025 completion. We are prepared to ramp up production immediately upon completion since these are Brownfield projects."

Question 3: "What is the rationale behind the capex reduction from INR370 crores to INR200 crores for FY '26?"

Answer: "Initially, we planned Greenfield expansions, but we shifted focus to enhancing existing facilities, which has significantly reduced capex. This allows us to achieve capacity increases at a lower cost, totaling around INR1,200 crores for the next three years to achieve 700,000 metric tons capacity."

Question 4: "When do you anticipate the aluminium hedging mechanism to come into play?"

Answer: "We expected it by last quarter, but it has taken longer than anticipated. All documentation is complete, and approvals are in place. We are hoping for it to be operational very soon, as we have been told it could happen any time now."

Question 5: "Could you provide the revenue and PAT contribution from overseas operations for this quarter?"

Answer: "The profit after tax from overseas operations was around INR10 crores, while 30% of the top line revenue was derived from overseas sales this quarter, reflecting our strategic sourcing and trading activities."

Question 6: "What is expected revenue contribution from rubber recycling in FY '27?"

Answer: "We project that the rubber business will contribute around INR70 to INR80 crores by FY '27 as we commence operations and scaling of this newly established vertical."

Question 7: "What is the expected volume capacity for lead by FY '27?"

Answer: "We anticipate the lead capacity to reach around 400,000 tons by FY '27. As we expand and ramp up operations, our target remains a volume CAGR of over 25%."

Question 8: "With other recyclers increasing capacity, how will you secure lead sourcing?"

Answer: "Regulations like the Battery Waste Management Rule are leading to more organized sourcing. It is expected that domestic scrap availability will increase significantly, moving to approximately 90% from the organized sector over the next few years, easing sourcing concerns."

Question 9: "What is the expected EBITDA margin for the aluminium and plastic segments?"

Answer: "For aluminium, we expect margins around INR12 to INR14 per kg. For plastics, the sustainable margin is estimated to be INR10 to INR11 per kg, reflecting market conditions and processing costs."

Question 10: "How does the domestic and international scrap sourcing split look currently?"

Answer: "For our Indian operations, we source approximately 52% domestically and 48% from overseas markets. This is an improvement compared to last year, when about 36% of our battery scrap was sourced locally."