Summary of earnings call for Gravita India Ltd published on 01 Aug, 2025

Gravita India Limited
Q1 FY26
Call date · July 29, 2025

1 · Management Commentary

Key Positives

• Strong start to FY26 with revenue up 15% YoY to INR1,040 crores, EBITDA up 22% YoY to INR111.70 crores, and PAT up 39% YoY to INR93.26 crores.
• EBITDA margin robust at 10.74%; PAT margin at 8.97%.
• Value-added products contributed 47% of revenue, nearing the VISION 2029 target of 50%.
• Net debt-free balance sheet; disciplined risk management and hedging strategies.
• Capacity at 3.40 lakh MT; on track to reach 7 lakh MT by FY28.
• ESG targets for FY27 on track; focus on sustainability and renewable energy.

Key Negatives

• Volume growth at 12% YoY, below the 25% long-term CAGR target.
• Aluminum plant in India operating at only 5% utilization due to lack of hedging mechanism.
• Plastic segment volumes and margins subdued; rubber segment still in stabilization phase.
• Capex in previous years lagged guidance due to delays in diversification projects.

Forward Guidance

• Capex plan of INR1,500 crores through FY28: INR1,000 crores for existing businesses, balance for new verticals (lithium-ion, paper, rubber, steel).
• 100,000 MT capacity addition targeted in FY26 (mainly in lead, rubber, lithium-ion); 125,000–150,000 MT planned for FY27.
• Pilot lithium-ion battery recycling unit at Mundra to be operational in Q2 FY26.
• Aluminum hedging on MCX expected to commence this quarter; Indian aluminum plant utilization to rise to 20–30% by Q4.
• Volume CAGR of 25%+ and profitability growth of 35%+ targeted over next 3 years.
• Non-lead segment to contribute 30%+ of revenue; >30% energy from renewables; energy intensity to reduce by >10%.
• M&A focus on Eastern Europe, Middle East, Asia Pacific in existing verticals.
• FY26 capex guidance: INR350–375 crores.

2 · Q&A Highlights

Q 1 (Composite): What is driving the strong EBITDA growth despite lower-than-expected volume growth, and are current margins sustainable?
A (Management):
• Margin expansion driven by higher value-added product contribution (47%) and sourcing/material shifts from Africa to India.
• Sustainable lead EBITDA margin guided at INR19–20/kg; aluminum at INR14–15/kg (currently INR17/kg due to market conditions).

Q 2 (Composite): Update on aluminum segment: MCX hedging, capacity utilization, and margin outlook?
A (Management):
• MCX hedging for aluminum expected to start this quarter; Indian aluminum plant utilization to rise from 5% to 20–30% by Q4.
• Margin sustainability supported by African sourcing and BIS approval; margins guided at INR14–15/kg.

Q 3 (Composite): Capacity expansion plans, capex allocation, and volume growth breakdown for FY26 and FY27?
A (Management):
• FY26: 100,000 MT capacity addition (mainly lead, rubber, lithium-ion); FY27: 125,000–150,000 MT planned.
• Capex of INR350–375 crores in FY26; INR60 crores already spent in Q1.
• Volume growth for FY26 expected at 22–28% (15–16% from existing, 7–8% from new capacity).

Q 4 (Composite): Sourcing strategy and impact of global scrap supply constraints, especially for aluminum and lead?
A (Management):
• African operations source scrap domestically within Africa; not reliant on European exports.
• Indian scrap availability improving due to EPR/BWMR regulations; no near-term sourcing constraints anticipated.

Q 5 (Composite): Segmental outlook: plastics and rubber margin trajectory, and lithium-ion pilot project contribution?
A (Management):
• Plastics: EBITDA margin stable at INR10/kg; volume ramp-up expected by year-end.
• Rubber: INR7–8/kg margin in Romania; similar expected in India post-stabilization.
• Lithium-ion: Pilot to be operational in Q2 FY26; no material profitability contribution expected in FY26.

Q 6 (Composite): Effective tax rate outlook and impact of treasury income?
A (Management):
• Effective tax rate expected at 15–16% in FY26 due to treasury income; will revert to 13–14% as funds are deployed.

Q 7 (Composite): M&A strategy and new verticals—focus areas and timeline?
A (Management):
• M&A focus on existing verticals in Eastern Europe, Middle East, Asia Pacific; major acquisition targeted in next 1–1.5 years.
• New verticals (steel, paper) to be pursued in later part of 3-year plan.

3 · Other Key Numbers

• Total volumes grew 12% YoY in Q1 FY26.
• EBITDA per ton: INR21,790 (lead), INR17,140 (aluminum), INR10,213 (plastics).
• Value-added products: 47% of Q1 FY26 revenue.
• PAT: INR93.26 crores; PAT margin: 8.97%.
• Current capacity: 3.40 lakh MT; target 7 lakh MT by FY28.
• Capex spent in Q1 FY26: INR60 crores.
• FY26 capex plan: INR350–375 crores.
• Lead capacity to increase by 50,000–60,000 MT in FY26.
• Rubber revenue target: INR300–400 crores by FY27/28; margin INR7–8/kg.
• 13 manufacturing units; commercial footprint in 70+ countries.
• Return on invested capital target: >25%.
• Non-lead segment revenue target: >30%.
• Renewable energy share target: >30%; energy intensity reduction: >10%.
• Treasury income in Q1 FY26: ~INR19 crores.
• Effective tax rate: 15–16% (FY26, due to treasury income).
• Aluminum plant in India currently at 5% utilization; target 20–30% by Q4 FY26.
• FY26 year-end capacity target: 4.6 lakh MT.
• FY27 capacity addition planned: 125,000–150,000 MT.

Note: This is an AI generated summary of the earnings call. There may be inaccuracies in the summary. Please refer to the original transcript before making investment decisions.