Gravita India reported a 29% year-on-year increase in adjusted EBITDA, supported by limited lead supplies and its recent expansion into copper. Brokerage firm Motilal Oswal has maintained its positive outlook on the stock, citing strong growth projections for the 2026-2028 period.
Gravita India, a leader in the recycling business, recently saw its financial performance highlighted by a 29% year-on-year growth in adjusted EBITDA, or core operating profit. This improvement was largely driven by higher profit margins per metric ton of lead, a result of tight supply conditions in the global market. Additionally, the company has begun consolidating its recent acquisition of a copper business, which is now starting to reflect in its financial results.
Growth Projections and Expansion
The company is focused on scaling its operations across multiple recycling segments. According to recent analyst reports from Motilal Oswal, Gravita India is expected to maintain a steady growth trajectory. Projections for the period between fiscal year 2026 and 2028 suggest a compound annual growth rate (CAGR) of 37% in revenue, 31% in adjusted EBITDA, and 24% in profit after tax. These estimates reflect the company's efforts to diversify its product mix beyond lead into metals like copper and plastics.
Investor Context and Risks
While the growth outlook appears positive, investors should remain aware of the inherent risks in the recycling sector. The company's profitability is highly sensitive to the prices of lead and copper, which are commodities traded globally. Any sharp volatility in these metal prices or changes in government policies regarding waste management and imports could affect profit margins. Furthermore, the company is currently in a phase of capital spending to support its expansion plans. Investors should track how effectively the company manages this debt while integrating new acquisitions, as successful execution is vital for maintaining these growth rates.
Market and Peer Comparison
The stock currently trades at a valuation based on projected earnings, with analysts assigning a target price of INR 2,100 based on a 27x multiple of estimated FY28 earnings. This valuation reflects a premium compared to the company’s own five-year average price-to-earnings ratio, suggesting that the market has high expectations for its future performance. Comparing Gravita India with peers, investors often look at how efficiently the company manages its working capital and its ability to source scrap, which remains the primary business advantage in the recycling industry. As the company continues to scale, the key monitorable for shareholders will be the commissioning of new capacity and the ability to sustain margins amid shifting global demand for recycled metals.