Gravita India Q2 Review - Traction In The Lead Business To Drive Growth; Reiterate 'Buy': Motilal Oswal

Motilal Oswal Report

Gravita India Ltd. reported revenue growth of ~11% YoY in Q2 FY25, led by healthy growth in the lead (up 12% YoY) and aluminum (up 17% YoY) verticals. Adjusted Ebitda margin expanded 140 bp YoY to 10.9%, led by operating leverage and better raw material sourcing during the quarter. 

Going forward, the company is expected to witness healthy growth led by accelerated traction in the core lead business, which can be attributed to the higher domestic scrap availability (due to penalty on non-compliance of extended producers responsibility and reverse charge mechanism under GST on metal scrap) and improvement in the aluminum business following the availability of new hedging mechanism (MCX contract expected to list by Q4 FY25).

We largely maintain our FY25E/FY26E EPS estimates. We reiterate our Buy rating on the stock with a target price of Rs 2,800 (40 times Sep’26E earnings per share.

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