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    Gravita India

    GRAVITAGood
    Metals & Mining·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

    8

    • 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.

    What Changed2

    vs Q1 FY26

    Guidance items6 → 8 (+2)Risks discussed3 → 4 (+1)

    Key financials

    Single quarter

    06 metrics
    1. 01Revenue₹3,869 Cr+22%YoY
    2. 02Adjusted EBITDA₹404 Cr+22%YoY
    3. 03PAT₹312 Cr+31%YoY
    4. 04EBITDA Margin10.4%
    5. 05ROIC (Pre-tax)27%

    Segment breakdown

    • Lead20,466 Rs40.8%
    • Aluminium19,836 Rs39.5%
    • Plastic9,882 Rs19.7%
    Donut· Share of EBITDA per ton (Q4)

    Guidance & targets

    8
    CategoryTargetPriority
    Capacity
    Total Recycling Capacity
    700,000+
    		High
    Capex
    Total Capex Deployment
    1500
    		High
    Revenue
    Volume CAGR
    25%
    		High
    Profitability
    Profitability Growth CAGR
    35%
    		Medium
    Margin
    Sustainable EBITDA per kg - Lead
    18-19
    		High
    Margin
    EBITDA per kg - Aluminium
    14-15
    		High
    Other
    Value-Added Product Mix
    50%
    		High
    Other
    Blended Tax Rate
    12-13%
    		High

    Risks & concerns

    5
    RiskSeverity

    Geopolitical Unrest

    Elections and subsequent unrest in Mozambique temporarily disrupted operations in Q4. — Management acknowledged

    medium

    Logistics and Shipping Costs

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

    medium

    Regulatory Delays

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

    medium

    Licensing Delays Overseas

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

    low

    Areas of Evasion(1)

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

    Q&A highlights

    3

    “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

    2 min read5 chapters

    Detailed Narrative

    01

    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%.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.