After a sharp rally in the previous session, recycling company Gravita India shares fell to profit-booking in the early session on Tuesday, May 6, after its strong Q4 earnings show. However, brokerages remained positive on the firm.
On May 2, Gravita India delivered a robust performance for the quarter ended in March, reporting 20 percent YoY revenue growth to Rs 1,040 crores, driven by a 13 percent rise in volumes. The firm’s net profit jumped 37 percent to Rs 95 crore in Q4, higher from Rs 69.4 crore reported during the year-ago period.
The aluminum business surged 73 percent YoY, while the lead segment maintained steady growth at 19 percent. However, the plastic business saw a 16 percent YoY decline.
At 10.30 am, shares of Gravita India were quoting Rs 1,886 on the NSE, down 2.6 percent compared to the previous session’s closing price. The sharp fall comes after a soaring 10 percent rally in the previous session.
Should you buy, sell, or hold Gravita India shares?
Suggesting a ‘buy’ rating, Nuvama Institutional Equities' analysts proposed a target price of Rs 3,067, estimating a 38 percent volume CAGR and stable margins in the range of 10–11 percent, to support 27 percent EPS CAGR over FY25–27E.
Motilal Oswal also holds a positive outlook, terming Gravita India as “a leading player” in India’s rapidly expanding recycling industry, reiterating a ‘buy’ tag on the stock with a target price of Rs 2,300.
The brokerage posited that the firm is well-positioned to deliver strong earnings growth over the medium term, owing to its strategic capacity expansion across verticals and geographies, an increased focus on value-added products, higher growth in new segments (rubber), and increased domestic scrap availability, driven by favorable regulatory tailwinds.
Domestic brokerage Emkay also maintained its ‘buy’ call, maintaining its target price at Rs 2,100.The brokerage however expects a profitability boost from Gravita’s Mundra project. Profitability is expected to remain balanced, with 40–50 percent from overseas and 50–60 percent from domestic operations.
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