Buy Gravita India; target of Rs 2800: Motilal Oswal

Motilal Oswal's research report on Gravita India

Gravita India (GRAVITA) reported strong revenue growth of ~31% YoY in 3QFY25, aided by total volume growth of 33% YoY. The growth was broadbased across segments, with aluminum reporting the highest growth (2.4x YoY), following by plastics (44%) and lead (up 23% YoY). However, adj. EBITDA/kg declined 14% to INR19.1, due to higher sourcing of domestic scrap (44%) in 3Q. The company’s core business (lead) is witnessing strong traction as the availability of scraps domestically has improved. Other segments are also picking up traction amid growing capacities and strong industry tailwinds. For 4Q, we estimate revenue/EBITDA/adj. PAT growth of 29%/21%/43%. We keep our FY25E/FY26E/FY27E EPS unchanged. We reiterate our BUY rating on the stock with a TP of INR2,800 (35x FY27E EPS).

Outlook

We expect a CAGR of 27%/30%/35% in revenue/EBITDA/PAT over FY24-27E. We maintain our FY25E/FY26E/FY27E EPS estimates. We reiterate our BUY rating on the stock with a TP of INR2,800 (35x FY27E EPS).