Leading out in style, Gravita India shares may go up to Rs 2,350: Motilal Oswal
Motilal Oswal has initiated coverage on Gravita India with a buy rating, and a target price of Rs 2,350, signalling a 30% upside potential, stating that the company is favored by strong industry tailwinds.
“We believe that with strong industry tailwinds, favorable regulatory policies, the availability of additional hedging mechanisms, and the absence of significant supply chain disruption, Gravita can ramp up the utilization materially (driving ~30% sales volume CAGR over FY24-27E)," ,” said Motilal Oswal in its report.
Gravita is one of the key players in the growing recycling industry in India. The company is primarily engaged in recycling lead (88% of revenue in FY24), aluminum (8%), and plastics (2%). Additionally, it offers turnkey solutions to its customers, assisting them in setting up recycling plants.
Gravita’s core business of lead recycling is expected to sustain the strong revenue growth momentum (at 21% CAGR over FY24-27), fueled by favorable regulatory changes and the formalization of the sector, it said.
However, the other key business segments, such as Aluminum and Plastic, are expected to report a much higher revenue CAGR of 49% and 52%, respectively, propelled by changing business scenario due to the introduction of new hedging mechanisms and stricter implementation of regulatory policies (such as the Plastic Waste Management Rule; PWMR).
“Further, Gravita enjoys multiple competitive advantages, such as strategically located manufacturing units, a deep procurement network, a diverse global
