The brokerage firm Motilal Oswal has turned bullish on Gravita (India), and has maintained a ‘Buy’ rating with a target price of Rs 2,300 per share. This implies a potential upside of 37% from current levels.
The brokerage believes Gravita (India) is entering a new phase of growth driven by factors such as the expansion into non-lead businesses like rubber and lithium battery recycling.
Motilal Oswal on Gravita (India): Domestic sourcing changing the game
According to the brokerage, regulatory actions like the Environmental Compensation (EC) penalty for EPR non-compliance have led to an increase in domestic scrap availability. This shift is playing to Gravita’s strengths.
As per the brokerage report, “the availability of domestic scrap has improved, leading to a 60% increase in domestic scrap sourcing by Gravita in FY25”. This, in turn, is expected to reduce working capital days from 85 in FY25 to 77 in FY26 and 76 in FY27.
The report forecasts cash flow from operations rising to Rs 3.6 billion in FY26 and Rs 3.1 billion in FY27, compared to Rs 2.8 billion in FY25.
Motilal Oswal on Gravita (India): Rubber and Lithium battery recycling
The company is preparing to enter the rubber and lithium-ion recycling segments, with its first plant expected to go live in Mundra by the first half of FY26.
“Management is targeting a revenue CAGR of ~70% from the rubber segment over the next 3-4 years,” Motilal Oswal highlighted. The aim is to increase the non-lead business contribution from 12% in FY25 to 30% by FY29, creating a more balanced revenue model.
Although lithium-ion recycling may take time to scale due to the limited availability of battery scrap, Gravita’s early investment in pilot projects could offer a long-term edge, the report noted.
Motilal Oswal on Gravita (India): Lead still leads, But with a premium edge
Lead recycling still contributes a dominant 88% of its revenues. But the company is working on adding more value to its product mix.
“Value-added lead products tailored to specific customer requirements will be a key growth driver,” Motilal Oswal report added. These products command 2% to 3% higher margins, and the company plans to increase their share to 50% of lead segment sales, up from 45% in FY25.
Motilal Oswal on Gravita (India): EPR and BWMR rules favours organised players
The Battery Waste Management Rules (BWMR) and Extended Producer Responsibility (EPR) norms are pushing the sector towards formalisation, an area where Gravita already has a presence.
“With stricter norms, organized recyclers like Gravita are gaining more market share due to better access to legal scrap,” the brokerage noted.
Furthermore, the brokerage is optimistic about the company’s growth prospects across all key financials. It projects a 30% revenue CAGR, 29% EBITDA CAGR, and 32% PAT CAGR between FY25-FY27.
“We value the stock at 31x FY27 EPS to arrive at our TP of Rs 2,300,” the report added, maintaining a Buy rating on the stock.