JM Financial initiated coverage on Gravita India with a ‘Buy’ rating and a target price of Rs 2,010, implying an upside of 31% from the current market price. The brokerage house identified the company as a “volume-led compounder” within the organised recycling ecosystem.
Regulatory-led formalisation of the sector
Stricter enforcement of the Battery Waste Management Rules (BWMR) and Extended Producer Responsibility (EPR) is structurally shifting scrap flows away from informal players. These regulations make legal accountability for end-of-life recycling non-negotiable for OEMs, who now prefer certified, compliant partners like Gravita India for verifiable traceability.
Massive capacity expansion roadmap
The company has a clearly defined roadmap to increase its installed recycling capacity from approximately 426 ktpa to over 700 ktpa by FY28. This brownfield-led expansion, particularly at its Mundra and Phagi facilities, provides strong multi-year visibility for volume-led growth with lower execution risk.
Stability through a hedged operating model
Gravita India operates a largely price-neutral, conversion-led business model. The company insulates its earnings from global lead price volatility by using a systematic LME back-to-back hedging framework for its lead inventory and sales. This maintains stable adjusted EBITDA margins (typically 9–11%) regardless of commodity cycles.
Deeply integrated moat and sourcing network
The company has built a defensible moat through an extensive procurement network of 1,900+ touchpoints and 33 owned scrap yards globally. This dense network ensures consistent raw material access and has already helped increase Gravita India’s domestic scrap share in India from 36% to 52%.
Strong financial compounding and diversification
Gravita India is expected to deliver a net profit CAGR of 24% over FY25–28 while maintaining disciplined capital allocation with RoE and RoIC at approximately 20% each. Furthermore, its expansion into new recycling streams—such as lithium-ion batteries, copper, and rubber—enhances its long-term growth optionality beyond its core lead franchise.
All in all, with regulatory tailwinds, a strong operational moat, and robust finances, JM Financial is confident in the company. All these factors supported the positive call on the stock.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.