Brokerage firm Motilal Oswal has started coverage on Gravita India, setting a target price of Rs 1,900 per share. The report expects earnings growth driven by copper business expansion and an anticipated recovery in lead volumes by late 2026. Investors may monitor the company’s supply chain efficiency and sensitivity to global metal price volatility.
Motilal Oswal has initiated coverage on Gravita India with a price target of Rs 1,900, highlighting the potential for strong growth in the company's earnings over the next few years. The brokerage firm expects the recycling specialist to benefit from a strategic shift in its product mix and operational improvements across its metal business segments.
The primary growth driver identified by the brokerage is the expansion of the company's copper operations. Motilal Oswal suggests that increased backward integration will likely help Gravita India enhance its profit margins. The firm projects that the copper segment’s profit per metric ton could rise to between Rs 80,000 and Rs 90,000 in the coming years, compared to the current range of Rs 65,000 to Rs 70,000.
While lead operations have experienced pressure recently, analysts expect a recovery in volumes starting from the third quarter of fiscal year 2027. This turnaround is anticipated as the company optimizes its international and domestic sourcing channels for scrap material. Stability in these supply lines is considered essential for improving output efficiency, given the logistical complexities often faced by recycling firms. The brokerage noted that the success of this turnaround relies on the company's ability to scale international sourcing effectively.
Motilal Oswal’s projections indicate potential growth for the company through fiscal year 2028, estimating a compound annual growth rate of 38% for revenue, 31% for adjusted EBITDA, and 22% for adjusted profit after tax. The price target is derived using a multiple of 25 times the estimated earnings per share for fiscal year 2028.
For investors, the business model of Gravita India involves inherent sensitivity to global commodity price fluctuations. As a recycler of lead, aluminum, and plastics, the company’s margins are influenced by the difference between raw scrap procurement costs and the selling price of the final refined metal. Consequently, success in executing the planned integration strategies and effectively managing supply chain disruptions will be key monitorables. Investors may also want to keep an eye on how effectively the company scales its capacity and maintains compliance with environmental standards, which are critical for the long-term operational sustainability of recycling businesses.