1. At a Glance
Gravita India Ltd, the ₹12,821 Cr lead recycler, has ridden a 49% profit CAGR over five years to report ₹312 Cr PAT in FY25. With ROE >21% and an ambitious ₹1,500 Cr capex plan by FY28, the stock trades at a frothy 41× P/E. Is this green play still ripe, or has value turned to waste?
2. Introduction with Hook
Imagine mining gold from your garbage—sounds like sci-fi, right? Yet Gravita India does exactly that, turning used batteries, cable scrap, and plastics into a ₹3,869 Cr revenue machine in FY25. But when a recycler sports a P/E north of 40, even Mount Trashmore starts looking like Everest.
3. Business Model (WTF Do They Even Do?)
- Lead Recycling (Flagship): Smelts and refines lead alloys, sheets, bricks, red lead, and lead oxide.
- Aluminium Recycling: Converts scrap into custom alloys.
- Plastic Recycling: Processes PET flakes and plastic granules.
- Rubber Recycling: Extracts tyre oil from end-of-life tyres.
- Turnkey Projects: Designs recycling plants globally (latest: Romania & Ghana).
4. Financials Overview – Profit, Margins, ROE, Growth
- Revenue: ₹3,869 Cr in FY25 (up 22% CAGR over 5 yrs)
- PAT: ₹312 Cr in FY25 (49% CAGR over 5 yrs)
- OPM: ~8%–11% quarterly range; FY25 at 8%
- ROE: 21.5% in FY25; 29% 3-year average
- ROCE: 21.6% in FY25; peaked at 32% in FY23
5. Valuation – Is It Cheap, Meh, or Crack?
- Current P/E: 41×
- Industry Median P/E: ~16.6×
- TTM EPS: ₹41.6 (₹312 Cr profit ÷ 7.5 Cr shares)
- Fair Value Range (EPS × 15–20×):
- Low end: ₹41.6 × 15 = ₹624
- High end: ₹41.6 × 20 = ₹832
- Conclusion: At ₹1,739, the stock trades >2× upper fair-value estimate—suggesting exuberance.
6. What’s Cooking – News, Triggers, Drama
- Capex Blitz: ₹1,500 Cr investment by FY28 for new recycling lines.
- Global Footprint: Acquired tyre-recycling plant in Romania (Mar ’25); launched aluminium facility in Ghana (Jan ’25).
- Audit Quirk: FY25 audit qualified on employee benefits—worth a second look.
- Tax Demand: ₹41.5 Cr notice from Income Tax Dept in Mar ’25.
7. Balance Sheet – How Much Debt, How Many Dreams?
- Borrowings: ₹286 Cr in Mar ’25 (down from ₹548 Cr in Mar ’24)
- Equity Capital: ₹15 Cr (FV ₹2; 7.5 Cr shares)
- Reserves: ₹2,055 Cr (up 250% in five years)
- Total Liabilities: ₹2,515 Cr vs. Assets ₹2,515 Cr
- Net Debt: Minimal, thanks to cash reserves and low interest burden
8. Cash Flow – Sab Number Game Hai
- Operating CF: ₹282 Cr in FY25 (vs. ₹42 Cr in FY24)
- Investing CF: –₹864 Cr (capex & acquisitions)
- Financing CF: +₹640 Cr (mostly new borrowings & share issue)
- Free Cash Flow: Temporary strain in FY25 due to heavy capex; watch FY26–27
9. Ratios – Sexy or Stressy?
- Debtor Days: 26 days (improved from 31)
- Inventory Days: 71 days (down from 96)
- Payable Days: 5 days (tight compared to peers)
- Cash Conversion Cycle: 92 days (vs. 117 days in FY24)
- Dividend Yield: 0.37% (modest; interim ₹6.35)
10. P&L Breakdown – Show Me the Money
| Segment | FY21 Sales | FY25 Sales | 5 Y CAGR | FY21 PAT | FY25 PAT | % of PAT |
|---|---|---|---|---|---|---|
| Lead Recycling | ₹1,410 Cr | ₹3,869 Cr | 25% | ₹71 Cr | ₹312 Cr | 65% |
| Aluminium Recycling | ₹42 Cr | ₹528 Cr | 60% | ₹6 Cr | ₹36 Cr | 7% |
| Plastic Recycling | ₹418 Cr | ₹1,512 Cr | 28% | ₹1 Cr | ₹112 Cr | 23% |
| Rubber (Tyre Oil) | ₹? | ₹? | n/a | n/a | n/a | n/a |
| Turnkey Projects | ₹? | ₹? | n/a | n/a | n/a | n/a |
11. Peer Comparison – Who Else in the Game?
| Company | CMP | P/E | ROE | Mar Cap (₹ Cr) |
|---|---|---|---|---|
| Gravita India | 1,739 | 41× | 21.5% | 12,821 |
| Lloyds Metals | 1,489 | 53× | 31.5% | 77,854 |
| NMDC | 69 | 9× | 23.6% | 60,769 |
| GMDC | 379 | 17× | 10.9% | 12,068 |
| MOIL | 370 | 20× | 15.0% | 7,512 |
- Gravita’s growth profile justifies a premium, but >40× P/E is at the far end of any peer band.
12. Miscellaneous – Shareholding, Promoters
- Promoters: 59.3% (down from 73% in Mar ’22)
- FIIs: 14.0% (up from ~1% in Mar ’22)
- DIIs: 5.4% (modest participation)
- Public: 19.9%, Others: 1.35%
- No. of Shareholders: 1.27 Lakh
13. EduInvesting Verdict™
Gravita India is the poster child for recycling’s investment thesis: stellar profit growth, strong returns, and global expansion. Yet, trading at >2× our ₹832 upper fair-value estimate (EPS × 20), the stock has morphed from hidden gem to heated gem. For those betting on capex payoffs and global recycling demand, patience may pay—just don’t expect bargains here.
✍️ Written by Prashant | 📅 July 12, 2025
Tags: Gravita India, Recycling, Lead, Aluminium, Stock Analysis, Fair Value, Peer Comparison, Financial Ratios, EduInvesting, India Markets
