GRAVITA - GRAVITA INDIA LIMITED Share Price

Gravita India Ltd. reported strong operational and financial growth for FY '25, achieving record revenue, EBITDA, and PAT. The management highlighted a 5-year CAGR of 23% in revenue and 57% in PAT, while also announcing their net debt-free status. The credit rating agency ICRA upgraded their rating to ICRA AA- Stable.

Strategically, Gravita acquired a waste tire recycling plant in Romania, investing INR 40 crores (INR 32 crores by Gravita). The plant has an annual capacity of 18,000 metric tons, enhancing its sustainability initiatives. Additionally, a pilot lithium-ion battery recycling project and a rubber recycling facility in Mundra are set to be operational by H1 FY '26.

For FY '25, consolidated revenue rose by 22% to INR 3,869 crores, with value-added products constituting 46% of revenue"”a step towards their "Vision 2029" target of 50%. EBITDA growth reached 22%, totaling INR 404 crores, with margins holding at 10.43%. PAT increased by 31% to INR 312 crores, generating a PAT margin of 8%.

Guidance for FY '26 includes a capex of INR 375-400 crores, with expectations of a 20%-30% growth in revenue. Management set ambitious long-term targets of over 25% in volume CAGR and 35% profitability growth, alongside a rise in non-lead contributions to over 30%. They forecasted EBITDA per ton for lead at INR 18-19, aluminum at INR 14-15, and plastic at INR 10-11, reflecting operational efficiencies and the evolving composition of their scrap sources.

Gravita continues to maintain a strong overall operational strategy, demonstrating a clear commitment to sustainable practices and innovative growth across its recycling verticals.

Q1: My first question is on the aluminium business... clarity in terms of timeline when it could be listed on MCX?
A: We expect the MCX listing for ADC12 within H1 FY '26, possibly in Q1. As Mr. Naveen mentioned, we're focused on MCX registration to support our Indian operations, while international operations don't require it as they can hedge on the Shanghai Exchange.

Q2: I appreciate the 25% revenue growth target... could you indicate a specific guidance range for FY '26 given... slowness in volumes growth?
A: For FY '26, we project a growth range of around 20% to 30%, in line with our overall target of 25%. This depends on the capex deployment and project timelines.

Q3: Regarding the guidance for 25% ROCE... should it not mean that ROIC should be much higher?
A: The 25% ROCE is a benchmark for new business ventures. While domestic sourcing may reduce working capital needs, the profitability from scrap could be lower, maintaining a consolidated ROCE above 25%.

Q4: When you set up a new facility... what's the kind of time it takes to set up a new facility?
A: Greenfield projects in India typically take 1 to 1.5 years, while brownfield projects can be done in 6 to 9 months. Regulatory processes in some countries can delay timelines.

Q5: Can you share insights on EPR credit realization... when will it start flowing into revenues?
A: The realization from EPR credits won't impact our bottom line directly, as they will offset costs for higher-quality scrap procurement. Any incremental profits will not be included in our growth plan.

Q6: Congratulations for the record performance... difference in overseas operations' profitability drop?
A: Fluctuations are due to materials imported from our plants to India and circumstances like higher domestic profits or operational disruptions in places like Mozambique, which we can manage.

Q7: What are our plans in the rubber space?
A: We aim to produce multiple products, including pyrolysis oil and crumb rubber. By year-end we plan to start producing reclaimed carbon black from our facility in Romania for market supply.

Q8: Could you help us understand the other income breakdown this quarter, especially the treasury income?
A: Treasury income in this quarter was about INR9 crores, with an additional INR7 crores savings from reduced debt costs, totaling an impact of around INR15-16 crores pre-tax.

Q9: What's your view... demand for lead, and how do you see EBITDA per ton guidance moving?
A: We expect minor impacts from global lead surpluses as they primarily affect mining. Our EBITDA guidance remains at INR18-19 per kilogram for lead, attributed to inherent recycling dynamics.

Q10: We've forecasted the formal segment of the lead recycling industry to sharply increase... is it an expected gradual change?
A: With the reverse charge mechanism expected this year for battery scraps, we foresee faster shifts from unorganized to organized sectors than previously anticipated.