Buy Gravita India; target of Rs 2900: Motilal Oswal

Motilal Oswal is bullish on Gravita India recommended buy rating on the stock with a target price of Rs 2900 in its research report dated September 24, 2024.

Broker Research

September 25, 2024 / 13:49 IST

buy

26 Aug, 2025 12:21

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Motilal Oswal's research report on Gravita India

Gravita India Ltd (Gravita), one of the largest recycling companies in India, is wellpositioned to benefit from strong industry tailwinds and healthy traction within the sector. Its Lead recycling vertical, which accounted for ~88% of revenue in FY24, is expected to achieve significant growth in the domestic market due to favorable regulatory changes. Additionally, the expansion of its geographical reach and product portfolio will be key drivers of its international business. Gravita is well poised to benefit from the recent favorable regulatory changes implemented this month. The introduction of Environmental Compensation (EC) for non-compliance with Extended Producer Responsibility (EPR) targets, along with the Reverse Charge Mechanism (RCM) under GST for metal scrap, is likely to improve the availability of domestic scrap for the organized recycling industry. Further, Gravita’s subsidiary has executed a Memorandum of Understanding (MOU) to acquire an 80% stake in a ~17,000 MTPA waste tyre recycling facility in Romania for INR320m. The remaining 20% will be held by other partners based in Romania.

Outlook

We increase our EPS estimates by 5%/7% for FY26/FY27E. We expect a revenue/EBITDA/PAT CAGR of 30%/32%/34% over FY24-27. We value the stock at 40x Sep’26E EPS to arrive at our TP of INR2,900. We reiterate our BUY rating on the stock.

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