Buy Gravita India; target of Rs 445: Emkay Global Financial

Emkay Global Financial is bullish on Gravita India has recommended buy rating on the stock with a target price of Rs 445 in its research report dated November 04, 2022.

Broker Research

November 05, 2022 / 13:50 IST

26 Aug, 2025 12:21

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Emkay Global Financial's research report on Gravita India

GRAV’s Q2FY23 adj. revenue was up 26% YoY at Rs6.9bn, while PAT (after minority interest) grew by 21% to Rs446mn, with H1 run-rate largely in line with our expectations for the year. Sequentially, gross profit declined 13% as Q1 had exceptional arbitrage opportunities in the domestic market and the Sri Lankan crisis affected operations in the island in Q2. Opex however fell, leading to largely flat adj. EBITDA of Rs642mn (up 28% YoY). EBITDA margin moderated to the guided ~9% level or Rs16k/ton+, with equivalent reduction across the three core segments. Total volumes grew by 17% YoY/24% QoQ. However, for GRAV, the positive surprise in Q2 was the sizable reduction in net debt, from Rs3.5bn to Rs2.7bn HoH, on the back of strong FCF of Rs1.1bn, supported by reduction in net working capital cycle from 83 to 66 days (based on our calculation), mainly on the drop in inventory by 16 days. Management maintained its upbeat tone, with capacity additions and scrap availability driving volumes along with improving efficiencies and balance sheet.

Outlook

We maintain our earnings estimates and retain Sep-23E DCF-based TP at Rs445/share. Reiterate BUY.

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