Gravita India’s (GRAV) performance was in-line with consensus estimates. The company reported EBITDA at INR 1bn (+15%/+9% YoY/QoQ) driven by: 1) total volumes rising 12.4% YoY to 53.4Kte (flat YoY); 2) better margins at the lead segment (INR 21,790/te; up 13%/7% YoY/QoQ), as GRAV used higher imported material that fetched better pricing; and 3) lower other expenses (cost incidence dropped 80bps sequentially and 20bps on YoY basis). GRAV maintains its long-term volume/profitability CAGR target of 25%/35% with the larger growth potential emerging FY27 onwards; management also maintained RoIC guidance of >25%.
OutlookWe assign a multiple of 35x to FY27E EPS (in-line with other high-growth conversion businesses) and arrive at a target price of INR 2,266. We re-initiate coverage with BUY.
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