Gravita India share price gained more than 3% in early trade on Wednesday after brokerage firm Motilal Oswal Financial Services initiated coverage on the stock with a bullish view. Gravita India share rose to a high of ₹1,887.40 apiece on the BSE, gaining over 4.31% from previous closing price.
Gravita India is one of the key players in the recycling industry and is primarily engaged in recycling lead, which consisted of 88% of its revenue in FY24, aluminum and plastics. It also offers turnkey solutions to its customers, assisting them in setting up recycling plants.
Brokerage firm MOFSL initiated coverage on the multibagger smallcap stock Gravita India shares with a ‘Buy’ rating and target price of ₹2,350 per share, implying an upside potential of up to 31% from Tuesday’s closing price.
Gravita’s core business of lead recycling is expected to sustain the strong revenue growth momentum (at ~21% CAGR over FY24-27), fueled by favorable regulatory changes and the formalization of the sector, MOFSL said.
The company is incurring significant capex of over ₹600 crore on the existing gross block of ₹480 crore to more than double the capacity over the next three years, to 686K MTPA by FY27 from 303K in FY24.
“We believe that with strong industry tailwinds, favorable regulatory policies, the availability of additional hedging mechanisms, and the absence of significant supply chain disruption, the company can strongly ramp up the utilization (~30% sales volume CAGR over FY24-27E),” MOFSL said.
The brokerage house expect Gravita India to report robust earnings growth on the back of strong growth within the lead recycling segment led by favorable regulatory changes; faster growth from the new segments (aluminum, plastic, and rubber) and addition of the steel and paper segments; robust capacity addition across segments; and a rise in the mix of value-added products.
It estimates Gravita to register a revenue and adjusted EBITDA and adjusted PAT CAGR of 26%, 29% and 31% over FY24 - FY27.
“Gravita currently trades at 31x/23x FY26E/FY27E EPS with an RoE/RoCE of 30%/25% in FY27E. We believe that the company will be a key beneficiary of the growing recycling industry in India and is poised to secure its share within the market led by multiple moats built around over the years,” MOFSL said.
However, according to MOFSL, key downside risks include supply chain issues and logistic disruptions, unfavorable regulatory changes, a delay in the ramp-up of new facilities, and volatility in commodity prices where the company has not fully hedged.
Gravita India share price has given strong multibagger returns to investors. Gravita India stock price has gained more than 36% in one month and nearly doubled in three months with more than 98% rally. Gravita India shares have surged over 70% year-to-date (YTD), and the stock has given multibagger returns of more than 150% in one year and over 905% in three years.
At 10:10 am, Gravita India shares were trading 2.64% higher at ₹1,857.05 apiece on the BSE.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
