Gravita India Q1 Results Review - Better-Than-Expected Earnings; Capex Plan On Track: ICICI Securities

ICICI Securities Report

Gravita India Ltd. Q1 FY25 Ebitda of Rs 877 million was 24% ahead of our estimates. Key points:

1. Overall volume grew 29% YoY; Ebitda/profit after tax grew 33%/29%, YoY.

2. Outperformance in aluminium segment was mainly on account of higher LME prices.

3. Two subsidiaries (into plastic recycling business) have been shut (one each in Jamaica and Costa Rica) – no impact on its business expansion plans.

4. Incurred capex of Rs 150–200 million in Q1 FY25; plans to incur capex of Rs 1.8 billion in FY25.

5. Net debt was Rs 4.7 billion, as of Q1 FY25-end.

Going forward, we peg volume growth of 25% YoY, Ebitda/earning per share growth of 38%/28% YoY till FY26E.

Given the investors' focus on circular economy, stable and better margins compared to peers and high return on equity, we raise the price to earning multiple to 30 times (earlier 21 times) on FY26E earning per share. Our revised target price works out to Rs 1,750 (earlier Rs 1,150).

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