Gravita India Limited

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%.

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.

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.

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.

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.