Gravita India - A Capex, ESG Play; ICICI Securities Initiates Coverage With A Buy

ICICI Securities Report

We initiate coverage on Gravita India Ltd. with a Buy rating. Key points:

1. Three-dimensional growth focus – spanning geographies, products and value chain – to aid earnings growth;

2. macro tailwinds in recycling may be a formidable growth catalyst;

3. ESG endeavour being strengthened with steep and crisp targets; and

4. free cashflow generation even during the period of peak capex may maintain balance sheet strength.

We peg Ebitda/EPS growth of 38%/24% through to FY26E and Ebitda margin improvement of 100-150 bps p.a. (versus FY24) aided by volume growth.

That said, in our view, earnings trajectory may improve further from FY27E aided by higher capacity utilisation; hence, we ascribe a price/earning multiple of 21 times (two deviations above past one-year mean) FY26E EPS, resulting in a target price of Rs 1,150.

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