Thread by @LnprCapital

GRAVITA INDIA Analysis !!
#GravitaIndia

A detailed thread below 🪡🧵
#StockMarket #Investingg

About -

Gravita India is a global leading non‐ferrous secondary metal & one of India’s largest secondary Lead metal producing company. Incorporated in 1992, Gravita is engaged in the recycling of Used Lead Acid Batteries, Cable Scrap, Lead Scrap, Aluminum Scrap & Plastic Scrap.

Financial Summary -
Q4 FY22 (YoY)

Revenue were at ₹ 666 Cr ⬆️52%
EBITDA at ₹ 73 Cr ⬆️ 102%
PAT at ₹ 41 Cr ⬆️94%

Product Overview -

• Gravita is a leading global non-ferrous secondary metal & one of India’s largest secondary Lead metal producing company.

• A vertically integrated business, economies of scale & diversified team of professionals enable it to deliver quality products

globally & catering to automobile, powerstorage and green energy sectors.

• Co also provides Solutions to Battery Recycling Industry including Lead Rotary Furnace, Lead Refining Pots, Alloying Furnace, Pollution & Fugitive Emission Control Equipment, Battery Cutting Machine.

Major Subsidiaries -

• A partnership firm (owned fully by Gravita) which holds 95% stake in Gravita Metals Inc (Kathua plant). Duty benefits in Jammu & Kashmir require the holding structure to be a partnership. 5% is held by Gravita Infotech Jaipur(100% owned by Gravita India)

• Gravita Global Pte Ltd, which is a 100% owned Singapore subsidiary which owns 100% in Gravita Netherlands BV, the main holding arm for the African and American ventures.

• Gravita Netherlands owns 100% stake each in Recyclers Ghana (new entity for expanded and relocated

Ghana plant, this entails tax benefits) and Gravita Senegal; 96-98% in Mozambique; 95% in Nicaragua; 99% in Tanzania and 52% in Sri Lanka. Except Sri Lanka, the residual stakes are also held by Gravita Global Pte.

• 62% of capital employed is in India (Rs4.1bn) while 38% is overseas with ₹ 630/780mn in Mozambique/Ghana, ₹ 270/380mn in Senegal/Tanzania and ₹ 110/230mn in Nicaragua/Sri Lanka.

Expansion Plans -

• Gravita aims to further diversify into segments such as Rubber, Copper & Brass, Steel, Paper & Lithium-e waste.

• The Mundra facility should see the addition of 24ktpa of Copper capacity by FY25.

• The co is also targeting a 90ktpa new Steel recycling facility in Africa by FY24-25 & 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.

Customers -

Co has Strong & long-term relations with Diversified Customers across Geographies.

Some of their Top Customers are :

Availability of Domestic Scrap -

• With shift of scrap from Informal to formal for processing through a authorized recycler.

• Contracts with battery manufacturers

• PAN India collection of scrap from corporates

• Contracts with various chains of workshops

Some of their Scrap collecting partners are :

Key Risks -

• Adverse global commodity prices, economic & industrial slowdown, macro events, oversupply & broader cyclicality can impact realizations, margins and volumes.

• Operational risks pertaining to plant outages and breakdown, supply chain disruptions & local issues.

• Risks from competitors & the entry of miners and OEMs into recycling

• Country risks in overseas operations, especially in Africa.

Conclusion -

With redefining of Battery Waste Management Rules (BWMR) , Extended producers responsibility (EPR) & stricter implementation of GST, the scrap availability for formal recycling sector has increased & is further expected to grow.

Gravita having Pan India presence and association with OEM’s will benefit the most from this shift.

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@Shubham_TLI @shubhfin