Gravita India shares rise 3% as Nuvama initiates with 'buy', sees 38% upside

Gravita India shares have rallied a massive 130 percent since the start of the year.

Shares of Gravita India were off to a positive start on the bourses on October 21, rising over 3 percent to Rs 2600 after Nuvama Institutional Equities initiated coverage on the counter with a 'buy' recommendation citing various levers for growth.

With a 'buy' call and a price target of Rs 3,475, the brokerage anticipates an upside potential of 38 percent from the last close of Rs 2,514 on the NSE. Gravita India shares have rallied a massive 130 percent since the start of the year.

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Nuvama expects the availability of battery scrap for organized recyclers in India to rise, driven by a regulatory push. In September 2024, the Government of India introduced penalties for non-compliance with recycling obligations and implemented a reverse charge mechanism for GST on metal scrap purchases from non-institutional dealers. As a pan-India player, Gravita India (GRAV) is well-positioned to benefit from increased capacity utilization and volume growth, with recycled lead volumes set to rise significantly over the next few years.

GRAV maintains a strong balance sheet and plans to fund future capex internally, keeping its debt levels manageable, the brokerage said in a note. The company’s high asset turnover and solid profit margins are expected to drive strong returns. Given the rising focus on ESG concerns and GRAV's growth prospects, the stock holds significant value potential.

With its widespread geographic presence across North, West, and South India, GRAV is the largest recycled lead producer in the country. This reach allows the company to efficiently source scrap and serve a broad customer base, reducing competitive risks. Its well-established network positions GRAV to capitalize on growing demand in the recycling space.

However, the brokerage has also highlighted risks. Any delays in commissioning capex plans could impact the company’s FY27 EPS by approximately 9 percent. In the existing segment, GRAV is banking on a shift in the recycled lead market from the informal to the formal sector in India. This shift is expected to support higher capacity utilization and drive a projected volume CAGR of 34 percent over FY24–27E. Any significant delays in this transition could result in lower-than-anticipated volume growth.

At about 9:20 am, shares of the company were trading at Rs 2,553, higher by 1.7 percent from the last close on the NSE.

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