Gravita India Limited — Q1 FY26 earnings call

Call held 29 Jul 2025

Management summary

Gravita India delivered a strong start to FY26, characterized by significant margin expansion and robust PAT growth despite moderate volume increases. The company is successfully transitioning toward higher-margin value-added products and leveraging domestic scrap availability boosted by EPR regulations. Management reaffirmed its 'VISION 2029' targets, focusing on aggressive capacity doubling and diversification into new recycling verticals like lithium-ion and rubber.

Highlights

  • Revenue reported at ₹1,040 crores, representing a 15% YoY growth.

  • Adjusted EBITDA increased 22% YoY to ₹111.70 crores with a margin of 10.74%.

  • Profit After Tax (PAT) surged 39% YoY to ₹93.26 crores, with PAT margins at 8.97%.

  • Total volumes grew by 12% YoY, despite shifting some material from African plants to India.

  • EBITDA per ton improved significantly: Lead at ₹21,790, Aluminum at ₹17,140, and Plastics at ₹10,213.

  • Value-added products contributed 47% of total revenue, nearing the VISION 2029 target of 50%.

  • Current capacity stands at 3.40 lakh MTPA, with a target to reach 7 lakh MTPA by FY28.

  • Company remains net debt-free with a planned capex of ₹1,500 crores through FY28.

Key financials

  1. Revenue ₹1,040 Cr +15%YoY
  2. Adjusted EBITDA ₹111.7 Cr +22%YoY
  3. EBITDA Margin 10.7%
  4. PAT ₹93.26 Cr +39%YoY
  5. PAT Margin 9%
  6. Volume Growth 12% +12%YoY

What they filed

Q1 FY27: revenue up 41.8%, net profit up 14.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue927 996 1,037 1,040 1,036 +12%1,017 +2%1,173 +13%1,475 +42%
EBITDA63 81 92 101 102 +62%120 +48%113 +23%110 +9%
Net profit72 78 95 93 96 +33%97 +24%92 −3%106 +14%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of EBITDA per ton
₹49,143 Total
  • Lead ₹21,790 44.3%
  • Aluminum ₹17,140 34.9%
  • Plastics ₹10,213 20.8%

Guidance & targets

Capacity

  • Total Recycling Capacity Capacity · by FY28 · High confidence 7,00,000
    The company is well positioned to cross the 7 lakh metric ton per annum mark by FY '28.

    — Yogesh Malhotra, CEO

  • Incremental Capacity Addition Capacity · FY26 · High confidence 1,00,000
    So we are expecting a capacity increase of around 100,000 metric ton this year.

    — Yogesh Malhotra, CEO

Volume

  • Volume CAGR Volume · next 3 years · High confidence 25%
    The company has set forward-looking goals, including achieving a volume CAGR of over 25%.

    — Yogesh Malhotra, CEO

Capex

  • Total Capex Plan Capex · by FY28 · High confidence 1,500
    With a capex plan of INR1,500 crores extending to FY '28, Gravita aims to deepen its presence.

    — Yogesh Malhotra, CEO

Margin

  • Sustainable Lead EBITDA Margin · FY26 · Medium confidence 19-20

    Previously 18-19 → 19-20

    So, yes, around INR19 to INR20 per kg can be expected as a sustainable margin going forward also.

    — Yogesh Malhotra, CEO

Other

  • Effective Tax Rate Other · FY26 · Medium confidence 15-16%

    Previously 13-14% → 15-16%

    But for this year, you can assume it to be near by 15% to 16%.

    — Sunil Kansal, CFO

Risks & concerns

  • Lack of Aluminum Hedging

    medium

    Currently no mechanism for hedging aluminum, leading to margin variability; management is working with MCX to list aluminum alloy.

    Both acknowledged

  • Global Scrap Supply Tightness

    medium

    Analyst raised concerns about European export controls on scrap; management countered that they rely on domestic African scrap and increasing Indian domestic availability.

    Analyst downplayed

  • Rising Effective Tax Rate

    low

    Tax rate increasing to 15-16% due to treasury income from QIP funds and expired exemptions in certain African jurisdictions.

    Analyst acknowledged

Areas of evasion (1)

  • Specific segment-wise breakdown of the ₹350cr FY26 capex was not fully detailed when asked.

Q&A highlights

3 direct
Sustainability of Lead EBITDA per kg Direct
Earlier, we were saying around INR18 to INR19, but now we see that there has been some -- because the value-added content has also increased... the overall EBITDA would increase to around INR19 to INR20 per kg.

Confirms a structural upward shift in core profitability due to product mix improvements.

Asked by Amit Dixit, Goldman Sachs

Aluminum Hedging and Utilization Direct
Aluminum on MCX is already on process, and it's expected to be done in this quarter... by Q4, you can expect around 20% to 30% utilization of the plant for India.

Addresses a key risk (lack of aluminum hedging) and provides a timeline for ramping up the currently underutilized Indian aluminum capacity.

Asked by Amit Dixit, Goldman Sachs

Capex Underspend in Previous Years Direct
Part of it was because most of that was going to take place in some newer -- I mean, diversification, newer verticals... we have put them in back burner because right now, in the existing verticals, we are seeing growth rates.

Explains why historical capex was lower than guidance (₹100cr vs ₹200cr target) and justifies the pivot back to core verticals for immediate growth.

Asked by Sumangal Nevatia, Kotak Securities

2 min read 5 chapters

Detailed narrative

Vision 2029 and Capacity Roadmap

Gravita is aggressively pursuing its 'VISION 2029' strategy, which targets doubling its recycling capacity from the current 3.40 lakh MTPA to 7 lakh MTPA by FY28. This expansion is backed by a ₹1,500 crore capex plan, with ₹1,000 crores earmarked for existing business lines and the remainder for emerging verticals. Management expects to add 100,000 tons of capacity in FY26 alone, with significant contributions starting from Q3 and Q4. The long-term goal includes a volume CAGR of over 25% and maintaining a return on invested capital above 25%.

Margin Expansion via Value-Added Products

A key driver of the quarter's 39% PAT growth was the shift toward value-added products, which now constitute 47% of total revenue. This shift has allowed management to raise its sustainable EBITDA guidance for the lead segment to ₹19-20 per kg, up from the previous ₹18-19 per kg. Despite a 12% volume growth which was slightly below some expectations, the focus on profitability over pure volume resulted in a 22% increase in adjusted EBITDA. Management emphasized that they are willing to sacrifice some volume to ensure higher profitability through arbitrage and value-addition.

Regulatory Tailwinds and Scrap Sourcing

The tightening of Battery Waste Management Rules (BWMR) and Extended Producer Responsibility (EPR) frameworks in India has significantly boosted the availability of domestic scrap. Management noted that while they previously relied heavily on imported scrap, the new regulations are making Indian scrap more accessible and traceable. This shift supports their strategy to increase Indian capacity utilization. In Africa, the company continues to leverage its 'first-mover' advantage with BIS approvals, allowing it to feed the Indian market from its African facilities even amidst global scrap supply constraints.

Diversification into New Verticals

Gravita is diversifying beyond its core lead business into aluminum, plastics, rubber, and lithium-ion battery recycling. The pilot lithium-ion unit in Mundra is expected to be operational in Q2 FY26, though it is not expected to contribute materially to profits this year. The rubber segment is projected to generate ₹300-400 crores in revenue by FY27-28 with EBITDA margins of ₹7-8 per kg. Aluminum utilization in India is currently low at 5% but is targeted to reach 20-30% by Q4 FY26 once hedging mechanisms on the MCX are established.

Financial Discipline and Treasury Management

The company maintains a net debt-free balance sheet, supported by funds from a recent QIP. This liquidity is currently generating treasury income of approximately ₹19 crores per quarter, which has temporarily inflated the 'Other Income' line and the effective tax rate to 15-16%. Management plans to deploy this capital into the ₹350 crore+ capex planned for FY26. They also indicated a strong interest in M&A opportunities in Eastern Europe, the Middle East, and Asia Pacific, having set up a dedicated division to evaluate potential acquisitions over the next 12-18 months.

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