Global investment banking firm CLSA has initiated coverage on Metal producer Gravita India Ltd. with a “outperform” rating in its latest note on Monday, October 12. The stock is up 4% in response.
CLSA has a price target of ₹1,980 on Gravita India, which implies an upside potential of 35% from last Friday’s closing levels. The price target is marginally higher than Gravita India’s recent 52-week high, which is ₹1,913.6. The stock is down 20% from those levels.
Gravita India is emerging as a key beneficiary of India’s accelerating shift towards the recycling-led metal supply and as primary supply is struggling to keep pace, the recycling becomes even more strategic, according to CLSA’s note.
“Gravita combines a deep scrap sourcing network, a formalising industry backdrop and a scalable multi-metal platform to drive strong earnings growth at industry-leading returns,” CLSA wrote in its note, adding that the Rashtriya Metal Industries Ltd.-led Copper expansion, further widens the opportunity beyond led for the company, opening up the next leg for growth.
Multiple moats are currently in place for Gravita India, thereby structurally positioning the stock to sustain the growth levels aided by diversified sourcing and a recycling footprint that enhances scrap access and lowers logistics costs, established OEM relationships that create entry barriers and provide access to organised scrap streams, and engineering capabilities that enable faster project execution, CLSA’s note said.
Copper is expected to provide the next leg of growth for Gravita India, according to CLSA, with the segment’s revenue and EBITDA mix increasing to 44% and 41% by financial year 2030, from the negligible levels that it currently stands at.
CLSA expects Gravita India’s Revenue to grow at a Compounded Annual Growth Rate (CAGR) of 41% over financial year 2026-2030, while its EBITDA and Profit After Tax (PAT), is likely to grow at a CAGR of 36% and 32% respectively. Return ratios will also improve after financial year 2028, according to the firm, as Copper production ramps up.
Key risks for Gravita India going forward include higher working capital intensity, tighter scrap availability due to potential scrap-export restrictions in key regions, a faster RV adoption and backward integration of OEMs.
All 11 analysts who have coverage on Gravita India have a “buy” rating on the stock. The consensus estimates of price targets implies an upside potential of 33% from current levels.
Shares of Gravita India are trading 3% higher on Monday at ₹1,511.3. The stock is down 19% so far this year.