Gravita India Limited — Investor Meet, 27-01-2025: Analysts/Institutional Investor Meet/Con. Call Updates

1. **Financial Performance**: Gravita India reported a strong financial performance for Q3 FY '25. Consolidated revenue rose by 31% year-on-year to INR 996 crores, with a sequential growth of 7%. Consolidated adjusted EBITDA increased by 14% to INR 102 crores, leading to an EBITDA margin of 10.3%. Profit After Tax (PAT) surged by 29% to INR 78 crores, giving a PAT margin of 7.8%. For the nine months ending FY '25, the consolidated revenue reached INR 2,832 crores, up 23%, while PAT grew by 28% to INR 217 crores, with EBITDA margins holding steady.

2. **Future Outlook and Growth Drivers**: Management expressed optimism regarding future growth, highlighting ambitions for significant capacity expansion, including plans to go from over 3 lakh tons currently to more than 5 lakh tons per annum by FY '27. Focus areas include tapping into new recycling verticals, such as lithium-ion batteries and rubber, alongside increased domestic sourcing of scrap due to regulatory changes.

3. **Order Book and Operational Updates**: The company’s operations in Ghana have commenced commercial production of recycled aluminum alloys with a capacity of 4,000 metric tons per annum, anticipated to double shortly. In Mundra, the expansion includes upcoming operations in rubber and lithium-ion battery recycling, with commissioning planned for H1 FY '26.

4. **Analyst Q&A Insights**:

- **Revenue and Profitability**: Analysts queried about EBITDA margins, which are expected to stabilize at INR 18-19 per ton for lead. The increased sourcing of domestic scrap may pressure margins, but management is confident of maintaining overall profitability.

- **Market Position and Competitive Landscape**: Responses indicated a robust confidence in market share retention, despite new entrants in the recycling space, driven by a shift from unorganized to organized sectors spurred by new regulations.

- **Operational Challenges or Risks**: Supply chain risks, especially related to global disruptions, were acknowledged. However, management emphasized a strategic focus on domestic sourcing to mitigate these risks.

- **Capex and Capital Allocation**: QIP proceeds are being used for debt repayment and working capital, with future expansions financed through a mix of internal generation and strategic acquisitions.

- **Strategic Priorities and Long-Term Vision**: The vision includes growing the share of non-lead revenues to 30% alongside leveraging ESG practices for sustainable growth.

5. **Market or Regulatory Updates**: The ongoing shift in regulations has increased domestic scrap availability, creating a favorable environment for growth in the recycling sector.

6. **Strategic Focus Areas**: Key strategic themes include a strong focus on expanding existing recycling capabilities, improving operational efficiency, and entering sustainable practices.

7. **Investor Insight**: The combination of strong financial health, positive growth outlook, and strategic direction suggests favorable sentiment moving towards a ‘buy’ position, given the continued implementation of growth drivers and adaptability to industry changes.