Detailed Narrative
Q3 & 9M FY26 Performance Overview
Gravita India delivered a consistent performance in Q3 and 9M FY26. For the nine months, revenue grew 9% YoY, EBITDA increased 15% YoY, and PAT saw a significant rise of 32% YoY. In Q3 FY26, revenue remained flat YoY at ₹1,017 crores. Adjusted EBITDA for the quarter stood at ₹116 crores, up 13% YoY and 4% QoQ, while PAT increased 32% YoY to ₹97.67 crores, with healthy margins of 11.41% (EBITDA) and 9.60% (PAT).
Capacity Expansion and Project Delays
The company's installed capacity has reached 3.40 lakh metric tonnes per annum, with an ambitious target to scale to over 7 lakh MTPA by FY28. Key lead capacity expansions of 80,000 MTPA at Mundra and 45,000 MTPA at Jaipur are targeted for completion by Q4 FY26. However, these projects have experienced some delays due to government approval processes in Gujarat, which management expects to resolve in Q4 FY26. The Mundra rubber project is slated for commissioning in Q1 FY27, with revenues expected from Q2 FY27.
Capital Expenditure and Funding Strategy
Gravita has earmarked a total CAPEX of ₹1,225 crores through FY28, with ₹850 crores dedicated to strengthening existing businesses and the remainder for new recycling verticals like lithium-ion, paper, and steel. For the first nine months of FY26, the company incurred ₹125 crores in CAPEX and anticipates crossing ₹200 crores by Q4 FY26. The overall CAPEX plan of approximately ₹1,200 crores over the next 2-3 years, along with ₹1,500 crores for working capital, is expected to be fully funded by internal accruals and existing liquidity from a prior QIP.
Segmental Performance and Raw Material Dynamics
In Q3 FY26, lead volumes showed steady growth, and plastic volumes rebounded significantly by 55% QoQ to 3,160 metric tonnes. However, aluminum volumes declined due to scrap aggregators withholding material in anticipation of higher prices, leading to lower procurement. EBITDA per metric tonne for lead, aluminum, and plastic stood at ₹23,000, ₹14,215, and ₹10,462 respectively. The domestic vs. imported raw material mix for Q3 was 25% domestic and 75% imported, a temporary shift due to arbitrage opportunities and stocking for expansion.
Strategic Growth and Regulatory Environment
The company is pursuing Vision 2029 targets, including a volume CAGR of over 25%, profitability growth above 35%, and ROIC exceeding 25%. It aims for the non-lead segment to contribute 30% of revenue and to increase renewable energy usage to 30%. The regulatory environment, with stronger enforcement of BWMR and EPR frameworks, is enhancing accountability and improving domestic scrap availability. Progress on MCX trading for aluminum is also under consideration, with expectations for Q1 FY27.
Hedging and Diversification into New Verticals
Gravita employs a 100% hedging strategy for its lead segment to mitigate price volatility. For aluminum, hedging is challenging as ADC-12 is not traded on exchanges, which influences lower volumes in this segment. The company is actively exploring diversification into new recycling verticals, including copper, solar panels, paper, and steel, with the Mundra rubber project being a key step in this direction. The increased stake in Gravita Europe S.R.L (from 80% to 95%) also strengthens its European market presence.
Impact of New Labor Law
The company anticipates a new financial impact from the recalculation of gratuity and leave encashment under the new labor law. This is expected to result in an additional annual cost of approximately ₹4.2 crores, which will be reflected in the financials from FY27 onwards. Management has acknowledged this upcoming cost and is factoring it into future projections.