Gravita India Limited — Credit Ratings, 13-02-2025: Credit Rating- New

Gravita India Ltd.'s consolidated revenue for the quarter reached ₹28,317 million, reflecting a growth of approximately 1.3% year-over-year. This increase can be attributed to a robust recovery in demand, especially in the lead recycling segment, which constitutes around 90% of total sales.

Net profit stood at ₹2,647 million, translating to an EPS of ₹8.60, compared to ₹2,671 million in the previous year. This slight decline in net profit year-over-year can be linked to increased operational costs, notably from expanding capacity and investments in efficiency improvements, though EBITDA margins remained stable at 10.4%.

Operational costs rose by 5.4%, mainly driven by elevated expenses in sourcing raw materials and enhanced staffing as the company scales operations. Despite this, the effective cost management strategies have helped mitigate significant impacts on profitability.

The balance sheet remains healthy, with a total debt of ₹3,393 million and an interest coverage ratio improving to 7.96x, indicating solid capacity to service debts. Free cash flow improved significantly, warranting a positive liquidity outlook as the company continues to focus on reducing debt through operational efficiencies and equity raised via a QIP.

Strategically, Gravita is poised for growth with plans to expand its capabilities in aluminium and lithium recycling, bolstered by regulatory support for waste recycling initiatives. Market sentiment appears favorable, given the robust demand forecasts for the recycling sector.

As for investor insights, a buy position is advised, supported by Gravita's stable profitability outlook, growth in operational areas, and sound financial management that positions the company well for future expansion.