Nuvama Eyes 62% Gravita India Surge on Copper Recycling Boom

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AuthorIshaan Verma|Published at:
Nuvama Eyes 62% Gravita India Surge on Copper Recycling Boom
Overview

Brokerage Nuvama sees Gravita India as a growth opportunity, forecasting a 62% upside with a ₹2,301 target. The positive outlook is driven by expansion in lead recycling and a strategic entry into copper recycling, expected to significantly boost volume and earnings from FY27. Despite a projected weak Q4FY26 due to external factors, Nuvama maintains a positive long-term view on the company's diversification and expansion.

Nuvama's forecast hinges on Gravita India's ambitious expansion, especially its significant move into copper recycling. This diversification is expected to propel volume growth to a projected 32% compound annual growth rate (CAGR) from FY26 to FY28, a sharp rise from the 12% CAGR recorded between FY22 and FY26. The expanded capacities are set to drive EBITDA and Profit After Tax (PAT) growth at 33% and 24% CAGR, respectively, during the FY26-28 period.

Gravita India's new copper operations are expected to contribute significantly, generating an estimated ₹80-90 crore annually or about 12% of consolidated EBITDA in FY27 and FY28. This strategy diversifies Gravita India's business, lessening its dependence on lead recycling and boosting overall stability. Additionally, the company plans a further 45 kilotons per annum (ktpa) expansion in its lead operations, slated for Q1FY27, signaling ongoing investment in growth.

Short-Term Challenges and Recovery

Nuvama acknowledges near-term challenges, forecasting a weak March quarter (Q4FY26). Potential volume loss in the Middle East and higher sea freight costs are identified as key external pressures. However, this expected dip is seen as temporary, with the firm anticipating growth to pick up again from FY27 once new capacities are fully operational and absorb these short-term impacts.

Valuation and Outlook

Nuvama has adjusted its valuation assumptions to reflect geopolitical uncertainties and potential risks, including lowering the target multiple applied to earnings. Despite these changes, the brokerage maintains a positive fundamental view on Gravita India. The stock currently trades at about 18.5 times its estimated FY28 earnings per share, indicating it is priced for growth. Nuvama's target price of ₹2,301 represents a compelling 62% potential upside from current levels, showing strong confidence in the company's expansion and diversification strategy.

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