Will Gravita India be able to maintain a Net profit CAGR of more than 50% for the next 5 years? Trade Brains Trade Brains

Recycling and waste management have been transforming the way we deal with our daily waste. People were increasingly realizing the importance of reducing, reusing, and recycling to create a sustainable environment. Innovative companies have been finding new ways to turn waste into valuable resources. Gravita India Limited has been a key player in this industry. In this article, we will explore Gravita India’s future outlooks and focus on financial performance, capacity expansion, and segments.

Recycling and Waste Management Growth

India’s recycling and waste management industry will grow at a CAGR of 11.9%, from $1.29 billion in FY22 to $2.26 billion in FY27. The global lead recycling market size has grown steadily in recent years. It has grown from $16.95 billion in FY23 to $17.39 billion in FY24 at a CAGR of 2.6%. This market is expected to reach $19.55 billion by 2028 at a CAGR of 3%. In India, the lead recycling market is 2.5 MMT, which is 2.5% of the world reserve.

The aluminium recycling market soared at a CAGR of 9-11% from FY15 to FY24. The global plastics recycling market is expected to achieve from $42.4 billion in FY24 to $57.9 billion in FY29, which is growing at a CAGR of 6.4% during the period. In India, the plastics recycling market has grown at a CAGR of 5.22%, which is from $4.09 billion in FY24 to $6.93 billion in FY33.

Company Overview Of Gravita India

Gravita India was established in 1992 by Mr. Rajat Agrawal. The company is a prominent multinational company specializing in recycling and manufacturing materials such as lead, aluminium, and plastics. It is also involved in the metal fabrication business. Gravita India Limited has grown to become a leader in the recycling industry, operating in over 70 countries. The company has reported more than 3350 employees in FY24.

Gravita India Limited has a customer base in over 38 countries across Europe, America, Asia, and Africa. The company is committed to sustainability, focusing on eco-friendly processes and technology innovation. The company’s mission is to be among the top 5 global companies in recycling by 2026.

Gravita India has one of the largest networks of waste collection, with more than 205K MT of scrap collected, more than 155K MT of recycled resources supplied, and more than 73 Turkey projects. The company has accumulated a healthy order book of more than 60000 MT. The majority of the company’s revenue emanates from the lead processing segment, and 50% of revenue comes from overseas.

Segment Analysis of Gravita India

Gravita India Limited’s business segments are lead processing, aluminium processing, turnkey solutions, and plastic manufacturing. It produces products like lead, aluminium, and plastic. The company has diversified its segments into four recycling verticals. Gravita India has 11 recycling plants all over the world and more than 1700 global touchpoints.

Gravita India Limited’s manufacturing facilities are located in Jaipur (Rajasthan), Kathua (J&K), Mundra (Mundra), and Chittoor (AP) in India, as well as in Ghana, Mozambique, Togo, Senegal, Tanzania, and Sri Lanka. The company has produced more than 1.69 lakh MT of products from the collected scrap of over 2.5 lakh MT. Gravita India Limited has recycled various products, such as lead by 148,500 MT, aluminium by 10,800 MT, plastics by 8,500 MT, and tire oil by 3,097 MT.

Partners of Gravita India

Source: Company’s Investor Relations

Financial Analysis of Gravita India

Looking deeply into the financial parts of Gravita India Limited. The company’s revenue has increased over the last five years. The revenue has increased by 12.86%, which is from ₹2,800.60 crore in FY23 to ₹3,160.75 crore in FY24. Gravita India Limited’s sales mainly from India by 62% and overseas by 38% in FY24.

The company’s revenue has split between lead by 87.37%, aluminium by 8.07%, turnkey projects by 2.47%, plastics by 1.29%, and others by 0.81% in FY24. The company’s volume growth increased by 14% year on year. The revenue has grown at a CAGR of 23.75% over the last four years. 

Gravita India Limited’s net profit has increased over the last five years. It has risen from ₹36.58 crore in FY20 to ₹242.28 crore in FY24. The net profit of the company has grown at a CAGR of 59.92% over the last four years. In FY24, Gravita India Limited’s net profit increased from ₹204.09 crore to ₹242.28 crore, which has grown by 18.71%.

The company’s operating profit margin has increased from 10.05% in FY23 to 11.16% in FY24. The net profit margin has grown from 7.05% to 7.48% in FY24. The company will demonstrate greater efficiency in generating profits from its core operations and overall business activities.

The company’s ROE and ROCE are 33.97% and 27.74%, respectively, in FY24. Gravita India Limited has increased its net borrowing from ₹348 crore in FY23 to ₹548 crore in FY24. This impacted on the debt-to-equity ratio of the company. It steadily increased from 0.58x to 0.65x in FY24.

Future Capacity Expansion and Capex

Gravita India Limited has improved its manufacturing capacity by 29.37%, which is from 2,33,919 MT in FY23 to 3,02,859 MT in FY24. Which includes 2,36,559 MT of lead, 30,000 MT of aluminium, 24,300 MT of plastic, and 12,000 MT of captive consumption capacity. The company is planning to expand its operations to increase the capacity of more than 5,00,000 MT in FY27.

In capital expenditure, Gravita India Limited has invested in FY23 by 110 crore and FY24 by 98 crore. The company is planning to increase additional capex for new segments by 40 crore in FY25, 70 crore in FY26, and 100 crore in FY27. 

Below the chart, we can easily understand future capacity expansion and capital expenditure.

Source: Company Investor Relation

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Future Outlooks of Gravita India

The company is targeting overall volume growth of 25% CAGR and profitability growth of 35% CAGR over the next 3-4 years.

The company has outlined a capex plan of over INR 600 crores up to FY27, mostly self-funded without significant new debt.

Gravita India is setting up a pilot project for lithium-ion battery recycling in FY 26, with a total investment of INR 70-100 crore. It will also establish paper and steel recycling plants by the financial year 2027.

Gravita India is planning to establish tyre recycling plant in Mundra, India, expected to be operational by FY26, with an initial capacity of 9,000 tons per annum and an investment of approximately INR 30 crores.

Gravita is developing in-house technologies for refining metals from lithium-ion batteries and expanding its R&D capabilities to support its new recycling projects.

The company is targeting a capex of approximately INR 180 crore, including INR 140 crore for existing verticals and INR 40 crore for new verticals in FY25.

Gravita India is aiming to increase non-lead business share to over 30% of total revenue. It also plans to use more than 30% renewable energy and reduce energy consumption by over 10% as part of its sustainability goals.

The company is working on increasing its capacities across various plants, including a new aluminium capacity in Ghana and enhancements at the Mundra plant.

Key Financial Metrics of Gravita India

Some of the key financial metrics of Gravita India Limited are given below.

Conclusion

In conclusion, Gravita India Limited shows promising future prospects, which will aim for substantial growth in volume and profitability over the coming years. Their financial strength is evident from increasing revenue and improving profit margins. Gravita plans significant capital expenditure in the near future.

They’re expanding capacity and diversifying into new segments like lithium-ion battery recycling. The company is also focusing on sustainability goals and increasing non-lead business share. With a strong order book and global presence, Gravita India Limited is well-positioned for growth in the recycling industry. Overall, Gravita’s strategic initiatives and financial stability point towards a positive outlook. What do you think about the future perspective of Gravita India Limited? Let us know in the comments below.

Written by Nikhil Naik

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Recycling and waste management have been transforming the way we deal with our daily waste. People were increasingly realizing the importance of reducing, reusing, and recycling to create a sustainable environment. Innovative companies have been finding new ways to turn waste into valuable resources. Gravita India Limited has been a key player in this industry.
The post Will Gravita India be able to maintain a Net profit CAGR of more than 50% for the next 5 years? appeared first on Trade Brains.   Read MoreFinancials, Market, Stock Analysis, Gravita India Limited, Gravita India Limited future plans, Gravita India Limited share price, gravita india share, Is Gravita India a good buy?, stock market Trade Brains