ICICI Securities believes that Gravita India's management is firmly focused on growth across both existing and new verticals; at the same time, it is increasing contribution of value-added products and lowering the reliance on lead. The brokerage believes that capex of Rs 15 billion over the next three years, represents a massive jump over the past years (past eight years capex at Rs 5.3 billion) and is likely to provide a solid pick-up to the earnings.
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ICICI Securities Report
Gravita India Ltd.'s performance was in line with our estimates.
Key points:
Ebitda (including hedging gains) was up 22% YoY at Rs 1.06 billion.
Ebitda margin (adjusted) was up 20 bps YoY (30 bps QoQ) at 10.3%.
Lead sales volume rose 12.3% YoY at 45.6kt.
Capex of Rs 1.07 billion in FY25 compared to Rs 981 million in FY24.
Going ahead, management reiterated its focus on volume growth viz. a 25% CAGR, and RoIC of >25% through to FY29. Furthermore, the capex through to FY28E is likely to be Rs 15 billion, implying that Gravita is fast-tracking capacity expansion. We lower our FY26E/FY27E EPS by 10%/4%, taking cognizance of lower-than-expected ramp-up of aluminium capacity. Additionally, adjusting for the recently concluded QIP, our revised target price works out to Rs 2,670 (earlier Rs 3,250). Maintain Buy.
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