ICICI Securities has set a ₹2,020 price target for Gravita India, citing growth potential from its ₹1,680 crore expansion plan. While the company faces short-term pressure from higher costs and geopolitical issues, the brokerage expects long-term earnings growth as capacity increases. Investors should watch how the company balances this large capital spending with its debt levels.
Gravita India is moving ahead with an ambitious expansion plan that aims to grow its total capacity to 800 kilotons (kt) by the end of the 2028-29 financial year. This plan involves a total investment of ₹1,680 crore, which will be used to scale up existing recycling operations to 654 kt and enter new business verticals with an additional 146 kt capacity. This update follows a recent review by ICICI Securities, which reaffirmed its long-term outlook for the company despite a softer performance in the first quarter of FY27.
Q1 FY27 Performance and Operational Pressures
In the quarter ended June 2026, Gravita India reported an EBITDA (operating profit) of ₹109 crore. While this represents a 9% increase compared to the same period last year, it is a slight decline of 2.5% compared to the previous quarter. The company faced challenges during this period due to higher operating costs and geopolitical issues that impacted global supply chains. Brokerage estimates suggest these supply chain problems may continue to create pressure through the first half of the current fiscal year. For investors, the ability of the company to manage these costs while maintaining its production margins will be a key factor to track in coming quarters.
Balancing Growth and Debt
The company's heavy investment strategy is a significant part of its future growth path. By planning to spend ₹1,680 crore over the next few years, Gravita India is prioritizing its position as a major player in the recycling sector. However, this level of spending brings financial risks. The brokerage firm noted that the aggressive expansion, combined with the need for more working capital, could lead to a rise in the company’s debt. Investors should pay close attention to how the company funds these projects—whether through internal cash flow or increased borrowing—as this will affect its balance sheet strength.
Looking Ahead
The long-term focus remains on the company's ability to successfully scale its new and existing verticals. The success of this strategy will depend on the actual speed of project execution and the demand for recycled materials in the global market. Key monitorables for shareholders include the commissioning timeline of the new capacity, any changes in debt-to-equity ratios, and updates on how the company is navigating the current geopolitical and raw material cost landscape.