The brokerage has retained its “buy” rating on the stock with a price target of ₹2,300 per share. Gravita India’s shares had ended the previous session at ₹1,680.7 apiece.
Gravita India is likely to report robust earnings growth going forward, aided by strategic capacity expansion across verticals and geographies, an increased focus on value-added products and higher growth in new segments, such as rubber.
Motilal Oswal said that Gravita, which is a prominent leader in India’s recycling industry, is well-placed to leverage strong industry growth and rising momentum through its global and pan-India operations, supported by a comprehensive procurement network.
The availability of domestic scrap has improved due to the implementation of environmental compensation (EC) for extended producer responsibility (EPR) non-compliance, the Motilal Oswal said. This has led to a 60% increase in domestic scrap sourcing by Gravita in financial year 2025.
This shift to domestic source is expected to improve working capital days for Gravita India, from 85 in financial year 2025 to 77 in financial year 2026 and 76 in financial year 2027, thereby enhancing cash flow from operations to ₹360 crore and ₹310 crore, respectively from ₹280 crore in the previous financial year, Motilal Oswal said.
The brokerage added that the increase in domestic scrap availability is expected to sustain as automotive battery manufacturers are now mandated to collect and recycle 90% of the batteries placed by them three years ago in the current financial year, up from 70% in previously. This, according to Motilal Oswal’s note, is likely to further increase the market share of organised players.
With Gravita India’s heightened emphasis on the non-lead segment, including its upcoming ventures in rubber and lithium ion recycling, currently in the prototype phase, both operations are scheduled to commence by the first half of the ongoing fiscal. The management is targeting revenue to grow at a Compounded Annual Growth Rate (CAGR) of 70% from the rubber segment, over the next three to four years.
This strategic expansion is expected to support the company’s goal of generating 30% of its revenue from the non-lead segment by FY29, the brokerage added.
Meanwhile, Motilal Oswal also said value-added lead products, tailored to specific customer requirements, will be a key growth driver for the lead segment, enabling Gravita to command a premium. These products offer margins that are 2%-3% higher than the base product. The company plans to increase the share from value-added products to 50% from 35% in FY25.
All six analysts that have coverage on Gravita have a “buy” rating on the stock. Motilal Oswal values Gravita India at 31 times its financial year 2027 Earnings Per Share (EPS).
Shares of Gravita gained 1.5% to hit an intraday high of ₹1,705 apiece on Thursday, June 19. However, the stock later pared gains and was down 0.32% at ₹1,674.1 apiece at 10.30 am. The stock has declined 20.8% in the past month.