Gravita India Limited — Q4 FY25 earnings call

Call held 5 May 2025

Management summary

Gravita India delivered a record-breaking FY25, characterized by strong volume growth and a strategic shift toward domestic scrap sourcing driven by tighter regulations (BWMR/EPR). The company is transitioning into a multi-vertical recycler, aggressively expanding into rubber, plastic, and lithium-ion batteries while maintaining a net debt-free balance sheet. Management remains committed to its 'Vision 2029' targets, focusing on high-margin value-added products and a significant capacity ramp-up to 700,000+ MTPA by FY28.

Highlights

  • Record annual performance with Revenue of ₹3,869 crores (up 22% YoY) and PAT of ₹312 crores (up 31% YoY).

  • Q4 FY25 Revenue reached ₹1,037 crores, up 20% YoY and 4% QoQ.

  • Adjusted EBITDA for FY25 stood at ₹404 crores with a margin of 10.43%.

  • Company achieved net debt-free status while maintaining a pre-tax ROIC of 27%.

  • Volume growth of 20% for FY25 and 13% for Q4 FY25; Lead and Aluminium volumes grew 12% and 62% YoY respectively in Q4.

  • Domestic scrap sourcing increased significantly to 43% of total scrap, up from 30% in the previous year.

  • Board approved an interim dividend of ₹6.35 per equity share, continuing a 14-year track record of payouts.

  • Strategic expansion into Europe with the acquisition of an 18,000 MTPA waste tire recycling plant in Romania.

Key financials

  1. Revenue ₹3,869 Cr +22%YoY
  2. Adjusted EBITDA ₹404 Cr +22%YoY
  3. PAT ₹312 Cr +31%YoY
  4. EBITDA Margin 10.4%
  5. ROIC (Pre-tax) 27%
  6. Cash Flow from Operations ₹282 Cr +571%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 (Q4)
₹50,184 Total
  • Lead ₹20,466 40.8%
  • Aluminium ₹19,836 39.5%
  • Plastic ₹9,882 19.7%

Guidance & targets

Capacity

  • Total Recycling Capacity Capacity · FY28 · High confidence 700,000+

    From 334,000 today

    Gravita continues to scale operations having reached 3.34 lakh metric ton per annum in capacity in FY '25 and is aiming for a significant milestone of 700,000 plus MTPA by FY '28.

    — Yogesh Malhotra, CEO

Capex

  • Total Capex Deployment Capex · FY28 · High confidence 1500
    The company has capex planning totaling INR1,500 crores to be deployed by FY '28.

    — Yogesh Malhotra, CEO

Revenue

  • Volume CAGR Revenue · next 3-5 years · High confidence 25%
    The company has set ambitious targets including a volume CAGR of over 25%

    — Yogesh Malhotra, CEO

Profitability

  • Profitability Growth CAGR Profitability · next 5 years · Medium confidence 35%
    profitability growth exceeding 35%

    — Yogesh Malhotra, CEO

Margin

  • Sustainable EBITDA per kg - Lead Margin · Sustainable · High confidence 18-19
    But our guidance is that on a sustainable basis, we can expect a INR18 to INR19 per kg in lead with a slight improvement of say around INR0.25 or INR0.50 every year

    — Yogesh Malhotra, CEO

  • EBITDA per kg - Aluminium Margin · FY26 · High confidence 14-15
    So aluminum also would be around INR14 to INR15 per kilogram going forward.

    — Yogesh Malhotra, CEO

Other

  • Value-Added Product Mix Other · Vision 2029 · High confidence 50%

    From 46% today

    46% of the revenue came from value-added products which is in line with our Vision 2029 of achieving 50% revenues from this category.

    — Yogesh Malhotra, CEO

  • Blended Tax Rate Other · FY26 · High confidence 12-13%
    So the blended tax rate should be closer to 12% to 13% on a global basis.

    — Sunil Kansal, CFO

Risks & concerns

  • Geopolitical Unrest

    medium

    Elections and subsequent unrest in Mozambique temporarily disrupted operations in Q4.

    Management acknowledged

  • Logistics and Shipping Costs

    medium

    Potential for container shortages in China to drive up global freight costs, though management believes global footprint mitigates this.

    Both acknowledged

  • Regulatory Delays

    medium

    Delays in government notification of RCM for battery scrap could slow the transition to the organized sector.

    Management acknowledged

  • Licensing Delays Overseas

    low

    Licensing in the Dominican Republic is taking longer than expected, delaying project timelines.

    Management acknowledged

Areas of evasion (1)

  • Specific location for the new plant in India (still finalizing).

Q&A highlights

2 direct
Overseas Profitability Drop in Q4 Direct
Part of the profits got diluted because the operations were hit in Mozambique... But major part of that increase or decrease in overseas volume or profitability is because we sometimes bring that material into India and realize the profits in India.

Explains the volatility in segment reporting; management actively uses arbitrage between overseas and domestic plants to maximize consolidated profit.

Asked by Amit Dixit, ICICI Securities

ROIC Sustainability with Domestic Sourcing Direct
The inventory cost would come down, but at the same time what will happen is that the margin or the EBITDA per ton or per kilogram for Indian scrap is lower than what we get from the overseas market. So the overall ROCE is also going to be above 25%

Clarifies that while domestic scrap improves working capital (lower inventory cost), it has lower absolute margins, yet the net effect on ROIC remains positive.

Asked by Bharat Shah, ASK Investment Managers

Reverse Charge Mechanism (RCM) for Battery Scrap Partial
We are expecting that to come in this year in lead scrap also... once that will come into picture, I think the shift over will take faster than we were expecting earlier.

RCM is a critical catalyst for shifting the industry from unorganized to organized players; its implementation timing directly impacts Gravita's domestic growth trajectory.

Asked by Sumangal Nevatia, Kotak Securities

2 min read 5 chapters

Detailed narrative

Strategic Pivot to Domestic Sourcing

Gravita has successfully increased its domestic scrap sourcing from 30% to 43% in FY25, driven by stringent BWMR and EPR regulations. This shift has improved inventory cycles and capacity utilization, as domestic scrap is more continuous in nature compared to imports. While domestic scrap offers lower EBITDA per kilogram, the reduced working capital requirement helps maintain a robust pre-tax ROIC of 27%.

Aggressive Multi-Vertical Expansion

The company is diversifying beyond lead recycling, aiming for non-lead businesses to contribute over 30% of revenue. Key projects include a pilot lithium-ion battery recycling plant and an inaugural rubber recycling facility in Mundra, both expected to be operational by H1 FY26. The recent acquisition of an 18,000 MTPA tire recycling plant in Romania marks a significant entry into the European market, with plans to scale rubber capacity to 60,000 MTPA within the year.

Robust Capex Roadmap to FY28

Management outlined a comprehensive ₹1,500 crore capex plan to be deployed by FY28, with ₹1,000 crore allocated to existing verticals and ₹500 crore for new initiatives like steel and paper recycling. For FY26, the company plans a capex of approximately ₹375 crores. This investment is central to achieving their milestone of 700,000+ MTPA capacity, more than doubling their current 3.34 lakh MTPA footprint.

Organized Sector Tailwinds

The lead recycling industry in India is expected to shift from 40% organized to 75% by FY26, contingent on the implementation of the Reverse Charge Mechanism (RCM) for battery scrap. Management expects this change to be notified in the upcoming 55th GST Council meeting. This transition is a major growth lever for Gravita, as it will redirect scrap from the unorganized sector to compliant, large-scale recyclers.

Financial Discipline and Shareholder Returns

Despite aggressive expansion, Gravita has achieved a net debt-free status, supported by a significant increase in cash flow from operations to ₹282 crores in FY25. The company continues to reward shareholders with an interim dividend of ₹6.35 per share. Management targets a sustainable blended tax rate of 12-13% due to overseas exemptions and utilized MAT credits of approximately ₹30 crores over the next 6-7 years.

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