Recycling Growth, Compounding Returns
Incorporated in 1992, Gravita India (Gravita) is India’s largest organised recycling company with a diversified presence across lead, aluminium, plastics and rubber and an expanding footprint in emerging recycling verticals. The company operates 13 manufacturing plants globally (end-3QFY26) with installed recycling capacity of ~426ktpa and a deep procurement network comprising ~1,900+ touchpoints and 33 owned scrap yards. Gravita services 340+ customers in 34+ countries, delivering ~200k+ tons of recycled products.
The operating model comprises four complementary businesses that optimise margins and capital efficiency across markets: i) Overseas recycling (~33% by volume) delivers the highest profitability (~INR28k/t EBITDA). ii) Imported scrap processed in India (~33% by volume) earns INR18–19k/t. iii) Domestic institutional sourcing (8–10%) yields ~INR12k/t. iv) Tolling arrangements with battery OEMs (~25%) generate lower margins (INR7–8k/t), but superior RoCE due to minimal working capital requirement. This diversified operating mix enables Gravita to balance profitability, scale and capital returns across cycles. Scrap availability remains a key risk for the company. However, Gravita’s strong sourcing network and own scrap yards minimize this risk.
Beyond its core lead recycling franchise, Gravita has steadily diversified into adjacent recycling streams, including aluminium, plastics and rubber while entering emerging segments such as lithium-ion battery recycling. With a net cash balance sheet, disciplined capital allocation (RoE and RoIC at ~20% each) and a clearly defined multi-year capacity expansion roadmap, Gravita is positioned as a structurally advantaged, volume-led compounder within the organised recycling ecosystem. We reckon its revenue/adjusted EBITDA/PAT would clock a CAGR of 23%/25%/24% over FY25–28E. Initiating coverage on Gravita India with a BUY and TP of INR 2,010 based on 25x (post-regulation multiple average) FY28E P/E.
