Motilal Oswal’s Bold ‘Buy’ on Gravita India: Why This Stock is Pumping Up!

Gravita India: A Quick Look at a Recycling Champion

First things first, who is Gravita India? Simply put, they are India’s largest lead recycling company. And when we say “largest,” we mean they’ve been showing some seriously impressive growth! Their financial numbers paint a very strong picture, showing how well they’re doing.

Let’s glance at their recent performance:

Financial Highlights: Pumping Up the Numbers!

Metric	FY25 (₹ Crores)	FY24 (₹ Crores)	Year-on-Year Growth (%)
Consolidated Revenue	3,869	3,161	22.4%
Net Profit	313	242	29.34%

As you can see, both their top line (revenue) and bottom line (profit) are soaring! But it’s not just the annual numbers; their recent quarterly performance has also been quite remarkable.

Q4 FY25 Performance: Ending the Year on a High Note!

Metric	March 2025 (₹ Crores)	Year-on-Year Growth (%)
Net Sales	1,037.07	20.11%
Quarterly Net Profit	95.13	37.91%

These numbers aren’t just figures; they’re a testament to Gravita India’s strong operational capabilities and their ability to capture market opportunities.

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What’s Driving the Optimism? Motilal Oswal’s Key Reasons

Motilal Oswal’s ‘Buy’ rating isn’t based on just one factor; it’s a combination of several powerful growth drivers that are setting Gravita India up for a fantastic future. Let’s break them down.

1. Riding the Regulatory Wave: Formalizing the Recycling Market

Imagine a market where rules suddenly start favoring the organized, legitimate players. That’s exactly what’s happening in India’s recycling sector, and it’s a massive boost for companies like Gravita.

The big game-changer here is the implementation of Environmental Compensation (EC) for Extended Producer Responsibility (EPR) non-compliance. In simple terms, companies that produce goods (like batteries) now have a legal responsibility to ensure their waste is recycled. If they don’t, they face fines (EC). This regulatory push has had a direct, positive impact on Gravita because it has significantly increased the availability of domestic scrap – the raw material for recyclers. In fact, Gravita saw a whopping 60% increase in domestic scrap sourcing in FY25 alone! This is huge because sourcing scrap locally is often more efficient and reliable than relying on imports.

Adding to this, the Battery Waste Management Rules (BWMR) 2022 are proving to be a true blessing for organized players like Gravita. These rules are strict: automotive battery manufacturers are now mandated to collect and recycle 90% of the batteries they sold three years ago. This is a big leap from the previous 70% requirement. What this means is that a huge volume of batteries must be recycled, and only large, organized players with the proper infrastructure can handle it. This effectively shrinks the informal, unorganized recycling market and pushes more business towards formal, compliant companies like Gravita. It’s a clear advantage.

2. Smart Money Management: Better Working Capital

One of the less glamorous but incredibly important aspects of a healthy business is how well it manages its day-to-day cash. Gravita India is improving here too, largely thanks to the shift towards domestic scrap sourcing.

When you source raw materials locally, you often have shorter lead times, less money tied up in transit, and simpler logistics compared to international imports. This translates directly into better working capital efficiency. Motilal Oswal forecasts that Gravita’s “working capital days” (a measure of how long money is tied up in operations) will improve significantly: dropping from 85 days in FY25 to 77 days in FY26, and further to 76 days in FY27.

What does this mean for the company? Better working capital means better cash flow! This improvement is expected to boost their cash flow from operations to ₹360 crore and ₹310 crore in FY26 and FY27 respectively, a noticeable jump from ₹280 crore in FY25. More cash means more flexibility for growth and managing operations.

3. Ambitious Growth: Aggressive Capacity Expansion

Gravita India isn’t just sitting back and enjoying the current growth; they’re actively planning for massive future expansion. Their Vision 2029 strategy outlines some truly ambitious targets.

They plan to more than double their current capacity: from approximately 334 KMT (Kilo Metric Tonnes) in FY25 to over 700 KMT by FY28. This is a huge leap, showing their confidence in future demand and their ability to capture a larger market share.

To fuel this expansion, they’ve set aside a substantial capital expenditure (capex) plan of ₹1,500 crore to be invested by FY28. A significant portion – ₹1,000 crore – is dedicated to expanding their existing recycling operations, while the remaining funds will be used to explore and develop new recycling initiatives.

Gravita India’s Capacity Expansion Journey

Financial Year	Current Capacity (Approx. KMT)	Target Capacity (KMT)
FY25	334	N/A
FY28 (Target)	N/A	>700

This aggressive expansion strategy clearly signals a company that is preparing to dominate a growing market.

4. Beyond Lead: Smart Diversification into New Recycling Segments

While Gravita is known as a lead recycling giant, they’re not putting all their eggs in one basket. A very smart part of their strategy is to diversify into new recycling segments. The goal is to reduce lead’s share in their overall business from its current 88% down to 70% by expanding into exciting new areas like rubber, lithium battery, and aluminum recycling. Management aims for these non-lead segments to contribute a full 30% of their revenue by FY29. This diversification not only reduces their reliance on a single commodity but also opens up huge new revenue streams.

Let’s look at some of these exciting new ventures:

• Rubber Recycling Boom: The rubber recycling segment is showing phenomenal potential. Gravita’s management is targeting a mind-boggling revenue CAGR of approximately 70% over the next 2-3 years in this segment! They’re already planning to add around 60 KMT of new rubber recycling capacity in FY26. What’s even cooler is that Gravita is not just focusing on India; they’ve already set up rubber recycling plants in African countries like Ghana, Senegal, Togo, and Tanzania, and recently acquired a waste tire recycling plant in Romania. This global footprint gives them a significant advantage.
• Powering the Future: Lithium-Ion Battery Recycling: This is where things get truly futuristic! Gravita is keenly aware of the electric vehicle (EV) revolution happening globally and in India. As more and more EVs hit the road, there will be a massive need to recycle their powerful (and sometimes tricky) lithium-ion batteries. Gravita is ahead of the curve, with a pilot project for lithium-ion battery recycling expected to be operational by the first half of FY26. This strategic move positions them perfectly to capitalize on India’s booming EV market, where lithium-ion battery demand is projected to skyrocket from just 4 GWh in 2023 to an astonishing 139 GWh by 2035! This isn’t just diversification; it’s future-proofing.Projected Lithium-Ion Battery Demand in India
  

  Year	Demand (GWh)
  2023	4
  2035	139

5. Boosting Profitability: Focus on Value-Added Products (VAP)

It’s not just about recycling more; it’s about recycling smarter! Gravita’s strategy includes a strong emphasis on producing Value-Added Products (VAP). These are products derived from recycling that are processed further to command higher prices and better profit margins.

The company has made good progress here, with VAP contributing 46% to its overall business in FY25. They’re aiming to push this even higher, targeting a 50% contribution from value-added products by FY29. This strategic shift towards higher-margin products is a key ingredient for sustained profitability growth, ensuring that Gravita not only grows in size but also in the quality of its earnings.

The Bigger Opportunity: India’s Booming Recycling Market

Gravita India isn’t just growing in a vacuum; it’s operating within a rapidly expanding and formalizing Indian recycling market. This broader market opportunity provides a strong tailwind for the company.

Battery Recycling Market: A Growth Powerhouse

India’s overall battery recycling market is poised for massive growth. It’s estimated at USD 152.68 million in 2025 and is expected to hit USD 235.57 million by 2030, showing a Compound Annual Growth Rate (CAGR) of 9.06%. Some estimates are even more optimistic, projecting the market to grow from USD 2.16 billion in FY2024 to an impressive USD 4.56 billion by FY2032, at a CAGR of 9.80%! This growth is driven by increasing battery consumption across various sectors, especially with the rise of EVs.

India Battery Recycling Market Projections

Year	Estimated Market Size (USD Million)	CAGR (2025-2030)
2025	152.68	9.06%
2030	235.57	N/A

Note: Some sources indicate higher future projections for the broader battery recycling market.

Lead Recycling Market: From Informal to Formal

The lead recycling market in India is undergoing a significant transformation. Historically, a large portion of lead recycling was done by unorganized, often informal, players. However, regulatory changes (like the BWMR 2022) are forcing a shift towards formal, compliant businesses.

• The informal segment’s share is expected to drop sharply from 65% currently to just 25% by FY26.
• Conversely, the formal segment’s share is projected to skyrocket from 35% to 75% in the same period!

Indian Lead Recycling Market: Formalization Trend

Segment	Current Share (%)	Projected Share by FY26 (%)
Informal	65	25
Formal	35	75

Gravita, with its established pan-India presence, advanced technology, and strong relationships with original equipment manufacturers (OEMs), is perfectly positioned to capture this massive shift and benefit immensely from the formalization of the market.

The Numbers Game: Financial Projections & Valuation

Motilal Oswal isn’t just guessing; their ‘Buy’ rating is backed by solid financial projections. They expect Gravita India to deliver impressive growth across key financial metrics over the next few years (FY25-27):

Key Financial Projections (Motilal Oswal, FY25-27 CAGR)

Metric	CAGR (%)
Revenue	30%
Adjusted EBITDA	29%
Adjusted PAT	32%

Gravita’s Vision 2029: Looking Further Ahead

Gravita itself has laid out ambitious targets under its Vision 2029 strategy, showing confidence in its long-term trajectory:

Vision 2029 Key Target	Goal
Sales Volume CAGR	~25%
PAT (Profit After Tax) CAGR	~35%
Return on Invested Capital (RoIC)	Over 25%
Value-Added Products Contribution	50% of total revenue
Non-Lead Business Contribution	30% of total revenue

The Valuation Angle

Motilal Oswal arrived at their ambitious target price of ₹2,300 by valuing Gravita India at 31 times its estimated FY27 Earnings Per Share (EPS). This valuation reflects not just the current growth but also the strong confidence in the company’s future potential, its continuously improving return ratios, and its dominant position in India’s booming circular economy.

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Widespread Confidence: What Other Analysts Are Saying

It’s not just Motilal Oswal who’s bullish on Gravita India! The positive sentiment is widespread across the analyst community. According to Bloomberg data, an impressive 100% of analysts who track Gravita India currently have a ‘Buy’ rating on the stock. This kind of unanimous consensus is rare and speaks volumes about the company’s prospects.

The average 12-month consensus price target from these analysts is even higher, at ₹2,438.67, implying a potential upside of 45.2%! This strong analyst backing further solidifies the investment case.

Other notable brokerages with ‘Buy’ or ‘Add’ ratings include:

• Nuvama Institutional Equities: ‘Buy’ with a target price of ₹3,067 (even higher!).
• Emkay Global: ‘Buy’ rating.
• Antique Stock Broking: ‘Buy’ rating.
• ICICI Securities: ‘Buy’ rating.
• Kotak Securities: ‘Add’ rating.

This widespread optimism from diverse financial institutions indicates a strong conviction in Gravita’s fundamentals and future trajectory.

Navigating the Road Ahead: Potential Risks and Considerations

While the outlook for Gravita India is overwhelmingly positive, no investment comes without its share of risks. It’s always smart to be aware of potential challenges:

• Supply Chain Disruptions: As a recycling company, they rely on a consistent supply of scrap. Any disruptions in their domestic or international supply chains could impact operations.
• Commodity Price Volatility: The prices of lead and other recycled materials can fluctuate, which might impact their margins.
• Execution Challenges: Gravita has aggressive capacity expansion plans and diversification goals. Successfully executing these large-scale projects on time and within budget will be crucial. Any delays or cost overruns could affect profitability.
• Debt Levels: The company currently has debt levels around ₹450 crore. While manageable, the substantial capex requirements for expansion mean their debt levels and cash flow management will need to be carefully monitored.
• Regulatory Changes: While current regulations are favorable, future policy shifts could introduce new challenges.

Being aware of these factors helps investors make informed decisions and manage expectations.

Conclusion: Gravita India – A Compelling Growth Story in Recycling

Motilal Oswal’s confident ‘Buy’ rating on Gravita India isn’t just another analyst call; it’s a recognition of a company uniquely positioned to capitalize on major industry shifts. The confluence of supportive regulatory frameworks, aggressive capacity expansion plans, smart diversification into high-growth recycling segments like rubber and lithium-ion batteries, and a strong focus on value-added products creates a truly compelling investment narrative.

Gravita India’s impressive financial performance, ambitious Vision 2029 targets, and its leadership position in India’s rapidly formalizing circular economy make it an incredibly attractive proposition for investors looking for long-term growth. The market is shifting from informal to formal players, and Gravita is perfectly poised to lead this transition. The strong consensus from various analysts further reinforces the confidence in its future.

For investors seeking to ride the wave of India’s growing recycling industry and circular economy, Gravita India, with its robust fundamentals and strategic foresight, presents a powerful case that justifies Motilal Oswal’s optimistic target price of ₹2,300. It’s truly a stock that’s pumping up for what looks like a very promising future!

 FAQs (Frequently Asked Questions)

1. What is Motilal Oswal’s target price for Gravita India?
   Motilal Oswal has issued a ‘Buy’ rating on Gravita India with an ambitious target price of ₹2,300, suggesting a potential upside of approximately 37% from current levels.
2. What are the main reasons for Motilal Oswal’s bullish outlook on Gravita India?
   Key reasons include favorable regulatory changes (like EPR and BWMR), improved working capital management, aggressive capacity expansion plans, diversification into new recycling segments (rubber, lithium batteries), and a focus on value-added products.
3. How is Gravita India expanding its business beyond lead recycling?
   Gravita India is strategically diversifying into rubber recycling (targeting 70% CAGR), lithium-ion battery recycling (pilot project operational by H1 FY26), and aluminum recycling, aiming for non-lead segments to contribute 30% of revenue by FY29.
4. What is the impact of new regulations like BWMR 2022 on Gravita India?
   The Battery Waste Management Rules (BWMR) 2022 mandate higher recycling targets for battery manufacturers, significantly benefiting organized players like Gravita by increasing domestic scrap availability and formalizing the market.
5. What are the potential risks associated with investing in Gravita India?
   Potential risks include supply chain disruptions, volatility in commodity prices, execution challenges related to aggressive expansion plans, and the need to monitor the company’s debt levels and substantial capital expenditure requirements.