Purchase Gravita India with a 1300 rupee goal: Emkay Global Financial

 Purchase Gravita India with a 1300 rupee goal: Emkay Global Financial

In a research note dated November 02, 2023, Emkay Global Financial expressed optimism about Gravita India and suggested a buy recommendation for the company, with a target price of Rs 1300.

The study conducted by Emkay Global Financial on Gravita India

Q2 consol. adj. revenue/EBITDA/PAT of Rs8.4bn/Rs798mn/Rs579mn was disclosed by Gravita India (GRAV), up 23%/24%/30% YoY, driven primarily by a 25% YoY increase in lead volume. Consol. vol. increased by 14% YoY as macros affected AL and plastics are no longer produced in Nicaragua. In addition to waiting for permission to establish a Li-ion recycling factory in Mundra, management has reaffirmed its expansion objectives. Paper is planned during the next one to two years. GRAV continues to have a strong financial sheet because to reliable ESG financing. Assuming a stronger margin profile, we increase our revision of FY25E EPS by 10%.

Prospects

We increase our target price to Rs1,300 from Rs915 because of the rollover to Sep-25 (which adds Rs214 including the EPS boost) and the improved target P/E of 23x (as opposed to 20x, which adds Rs170), driven by steady performance. Higher net financing costs are the reason for our 5% decline in FY24E EPS. Keep BUY.