Synopsis:
Axis Securities has reaffirmed its Buy rating on Gravita India Ltd, setting a target price of Rs. 2,600, implying an upside potential of 38.59% from current levels.
Axis Securities has issued a buy rating on India’s largest lead producer, citing strong operational performance and future growth visibility. The brokerage sees an upside potential of 38%, driven by volume expansion, increased contribution from value-added products, and capacity ramp-up plans. With market capitalization of Rs. 13,630 cr, the shares of Gravita India Ltd are currently valued at Rs. 1876 per share with its previous close of Rs. 1898 per share.
About the company
Established in 1992, Gravita India Ltd is one of the largest lead producers in India. The company’s business is organized across four specialized verticals such as Lead Recycling (flagship), Aluminum recycling, Plastic recycling and Turnkey projects. The company also has expertise in the recycling of used batteries, cable scrap/other Lead scrap, Aluminum scrap, Plastic scrap, etc.
Rationale
Gravita India Ltd. showcased a strong operational performance in Q1 FY26, driven primarily by a 12% year-on-year increase in volumes. This growth was led by an exceptional 96% surge in aluminium volumes and a 10% rise in lead volumes. As a result, the company recorded a 15% YoY revenue growth. A significant contributor to this performance was the increasing share of value-added products, which constituted 47% of total revenue for the quarter. The company reported an EBITDA of Rs. 112 crore, inclusive of hedging gains, highlighting its efficient cost and product mix management.
The company’s capacity expansion strategy remains on track, with the current operational capacity of 3.4 Lakh MTPA projected to rise by an additional 1 Lakh MTPA by the end of FY26. Gravita has set a roadmap to scale its capacity to 7 Lakh MTPA by FY28. Among its key projects, the lithium-ion battery recycling pilot plant at Mundra is expected to become operational in Q2 FY26, while the rubber recycling facility at the same location is likely to contribute by the end of FY26. Additionally, the recently acquired rubber recycling unit in Romania is already delivering an EBITDA of Rs. 7–8 per kg, and its performance is expected to improve in the second half of FY26.
Company Outlook & Guidance
Looking ahead, Gravita is optimistic about accelerating growth from H2FY26, backed by its long-term strategic roadmap. The management has guided for a 25% compound annual growth rate (CAGR) in volumes and 35% CAGR in profitability, while maintaining a robust return on invested capital (ROIC) above 25%. Volume growth for FY26 is projected at around 25%, with 15–16% expected from existing capacities and an additional 8–10% from new facilities that will start contributing from Q3 FY26 onwards.
The sector outlook remains positive, fueled by rising scrap availability, a growing contribution from non-lead product segments, and a higher mix of value-added products. Gravita plans a capital expenditure of Rs. 1,500 crore by FY28 Rs. 1,000 crore will be allocated towards capacity enhancement in existing business verticals, while Rs. 500 crore will support diversification into emerging recycling domains such as lithium-ion batteries, paper, rubber, and steel. The company also intends to pursue geographic expansion and is targeting meaningful progress in new markets by FY26. The effective tax rate for FY26 is projected to remain stable at around 15–16%.
Written by Manideep Appana
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
The post Financially strong stock to buy now for an upside of 38%; Recommended by Axis Securities appeared first on Trade Brains.