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    Gravita Insights - Gaurav Satra

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    Gravita Insights - Gaurav Satra

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    Gravita Insights- Gaurav Satra

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    Gravita Insights - Gaurav Satra

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    of 4

    GRAVITA INDIA LTD.

    Why Recycling Sector?


    Recycling is a part of larger environment protection theme globally; organized players to gain
    bigger share Globally, the importance of recycling as an environment protection theme is
    growing. Metal recycling, although a preferred option, has been a traditional business.
    However, new segments such as Plastics, Rubber and e-waste are getting pricing premium as
    high as 25% over virgin products, if the same level of purity is achieved. Plastic recycling
    credits (certificate) are also expected to be introduced going ahead. We believe that the
    global thrust on sustainability and a circular economy should improve sentiment for organized
    recyclers, especially in emerging economies, and they should get the scope, opportunity and
    higher value for their businesses, especially in comparison with their commodity, mining and
    manufacturing peers.

    Why Gravita India in this sector?


    Gravita is a leading global recycling company with 13 eco-conscious state-of-the-art
    manufacturing facilities in Asia, Africa and Central America with a capacity of 1,82,619 MTPA.
    The Group is having global footprints in 70+ countries having recycling DNA of 29 years with
    4 business verticals. The company is amongst top 1000 listed companies on NSE and BSE Ltd
    with market capitalization of ~ 2500 crores.

    Comparison with Peers Figures in Rs. Mn

    FY 20-21 Gravita Pondy Nile Chloride


    Type Listed Listed Listed Unlisted
    Revenue 14,097 10,043 5,364 18,547
    EBITDA 1,119 234 248 245
    EBITDA Margin 7.9% 2.3% 4.6% 1.3%
    PAT 525 108 138 140
    Net Debt 2,412 1,447 508 557
    Debt –Equity 1.0 0.9 0.4 0.3
    RoE 23% 7% 10% 8%

    Gravita’s margin profile and RoE are better than its peers. In terms of size in Lead recycling, Chloride
    Metals reported higher revenues in FY21 due to Exide’s large demand base. Gravita’s dealings with
    Exide is currently very less, though in the past it had recycled for the battery major.
    Key Financial Highlights 9M FY 2022 – Consolidated

     Revenue from Operations of Rs. 1549 Crores, YoY growth of 60%


     EBITDA of Rs. 142 Crore, YoY growth of 75%
     PAT of Rs. 98 Crore, YoY growth of 215%

    Key Financial Highlights Q3 FY2022- Consolidated

     Revenue from Operations of Rs. 557 Crores, YoY growth of 49%


     EBITDA of Rs. 54 Crore, YoY growth of 69%
     PAT of Rs. 39 Crore, YoY growth of 150%
     Board of Directors announced interim dividend of 150% i.e. Rs. 3.00 per share
     PAT margins were 7.06%.

    In Q3FY22, company has announced operationalization of new recycling unit at Mundra Port,
    Gujarat. The 48,000 MTPA plant (with 19,500 MTPA operational in Phase-I), with a strategic
    location and equipped with state-of-the-art facilities, is expected to increase share of higher-
    margin business from the overseas market and enhance operational efficiency and
    profitability. Capital expenditure of Rs. 32 crores had been incurred and additional Rs. 30
    crores outlined for further capacity increase.

    Financial Snapshot (Consolidated)

    Rs. Mn F.Y. 19-20 F.Y.20-21 F.Y.21-22E F.Y.22-23E


    Revenue 13,478 14,097 19,939 26,756
    Ebitda 975 1,119 1,862 2,535
    Ebitda Margin (%) 7.2 7.9 9.3 9.5
    APAT 332 525 1,013 1,410
    EPS (Rs.) 4.8 7.6 14.7 20.4
    ROE (%) 18.1 21.2 32.5 34.0
    P/E (x) 44.0 27.8 14.4 10.3

    Share Holding Pattern

    Particulars Mar-21 Jun-21 Sep-21 Dec-21


    Promoters 73.00 73.00 73.00 73.00
    FII 0.00 0.00 0.86 1.38
    DII 0.25 0.00 0.00 0.15
    Public 24.75 25.00 24.14 23.47
    Others 2.00 2.00 2.00 2.00
    Promoter & Management
    Gravita is promoted by first-generation entrepreneur Mr. Rajat Agrawal, who is also the
    Managing Director. The promoter group holds a 73% stake in the company, while 2% is with
    an Employee Welfare Trust. In the last one year, promoters’ shareholding rose by 0.49%.

     Mr. M.P. Agarwal is Chairman of the six member board. There are three independent
    directors.
     Mr. Yogesh Malhotra is the CEO and whole-time director.
     Senior management comprises CFO Mr. Sunil Kansal and SBU heads for all verticals
    designated as EDs and VPs.

    Opportunities Ahead
    Gravita aims to further diversify into segments such as Rubber, Copper & Brass, Steel, Paper
    and Lithium-e waste. A new 5.3ktpa Rubber unit in Ghana and a 1.6ktpa Copper-Brass unit in
    Tanzania are expected to be commissioned by H1CY22. The Mundra facility should see the
    addition of 24ktpa of Copper capacity by FY25. Other African facilities should also gradually
    add up. The company is also targeting a 90ktpa new Steel recycling facility in Africa by FY24-
    25, and a 96ktpa Paper unit in Nicaragua by FY25-26. Lithium recycling is aimed by the end of
    the decade as scrap availability is very low as of now. It is tying up with technology partners
    in Israel-Europe.

    Company Background
    Gravita India Ltd was established in the early 1990s, with the first recycling plant being set
    up at Phagi in Jaipur, Rajasthan in 1994. The company is headquartered in Jaipur with
    recycling plants located in Gujarat, Andhra Pradesh, Jammu & Kashmir, Sri Lanka (Mirigama
    export zone), Ghana (Accra), Mozambique (Maputo), Senegal (Dakar), Tanzania (Dar-es-
    Salam) and Nicaragua (Managua). It has 27 procurement yards (almost all abroad) with
    1,400+ touchpoints and 160ktpa of scrap collection in total (in FY21). It delivers 105ktpa+
    recycled products to 60+ countries including the Americas, Europe and the Middle East. It
    has a pan-India presence, with 200+ customers in 18 states. Amara Raja is one of the key
    partners for Gravita in India.
    Gravita also provides turnkey solutions (engineering and capital goods business) like Lead
    Rotary Furnace, Lead Refining Pots, Alloying Furnace, Pollution & Fugitive Emission Control
    Equipment, Battery Cutting Machine, Battery Crushing & Hydro separation System, etc. It
    has a facility in Jaipur SEZ. It has over 450 employees.
    Sources:-

     www.gravitaindia.com (Official Site of Gravita India Ltd)


     www.screener.in
     www.bseindia.com
     Report of India Equity Research Initiating coverage on Materials Recycling
     Conference call with Management.

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