ICICI Securities research report on Gravita India
Gravita India’s (GRAV) Q2FY25 performance was in line with our estimates. Key points: 1) Production volume rose 7.7% YoY aided by Lead (Pb), growing at 8.7% YoY. 2) Profitability was aided by LME-MCX arbitrage. 3) Capex plans largely on track with H1FY25 capex at INR 270mn. 4) Net debt/EBITDA was at 1.5x, as on end-Sep’24, compared to 1.6x at end-FY24. Management has maintained its long-term strategic growth and returns roadmap. In the near term, it expects regulatory tailwinds – reverse charge mechanism (RCM) and enhanced producer responsibility (EPR) – to aid scrap collection in the domestic market and ensure a level-playing field.
Outlook
We maintain BUY on GRAV with a DCF-based unchanged TP of INR 3,265.
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