Gravita India Limited (“Gravita India” or the “Company”) is a leading global secondary metal producing company. The Company provides diversified range of product for variety of application in over 50 countries, globally. The Company’s product caters to the auto, telecom, and power, nuclear and medical industry. Gravita derives 58% revenue from overseas market.

Promoters Holding – 73.06%

WHAT’S GOING FOR THE STOCK

Growing Global Lead Industry

The global lead market is estimated to reach 12.5 million metric tons in FY 2017 and 14 million Metric tons by FY 2020. During the next 3 years, the industry is expected to grow at a CAGR of 2-3%. The growth of developed markets will be driven by the U.S., Japan and few European markets like Germany, France and the U.K.

Also Read: Future of Metal Stocks in India

Global Lead Acid Battery (LAB)

Lead acid batteries are the largest driver of growth globally and take a much bigger market share. LAB will account for over 5% of the incremental growth between 2016 and 2020.

Key drivers for demand include:

  • Increase in scrap rate of vehicles;
  • Usage of LAB in other than automobile segment like energy storage devices for telecommunication segment and non-conventional energy segment;
  • Increasing disposable income in emerging markets leads to increase in vehicle populations.

Operates through 3 Integrated Business Verticals

[1] Manufacturing – Gravita India operates through a state-of-the-art nonferrous metals (lead and aluminium) processing unit at Jaipur (Rajasthan), India. The Company carries out smelting of lead ore / lead concentrate / lead battery scrap and aluminium scrap to produce secondary lead metal and aluminium ingots.

[2] International Trade – Gravita India is a leading export and import company engaged in non- ferrous metals like lead metal, lead products, lead sheet, pure lead, lead alloys, lead battery scrap, lead blocks, lead ore and aluminium scrap round the world.

[3] Turnkey Projects – Gravita India offers customized turn-key solutions for lead acid battery recycling processes and plants. So far the Company has executed

Increasing Installed Capacity

The Company operates through 10 manufacturing plants across 7 countries with combined operational capacity of 98,749 million tons per annum (MTPA) (as of March 2016). In January 2017, Gravita India has commenced commercial production of lead metal from its new recycling plant situated at Chittoor, Andhra Pradesh. This plant has an installed capacity of 12,000 MTPA.

Apart from India, the Company has its manufacturing facilities in Ghana, Senegal, Mozambique, Sri Lanka and Nicaragua for lead and PET recycling. In order to further expand and to reap the benefit of low cost raw material available globally, Gravita is planning to explore its footprints globally in USA, Jamaica, Bolivia, Costa Rica and Tanzania.

Financial Position

Gravita India has shown consistent growth over the last 5 years (i.e. 2011-12 to 2015-16). During this period the Company’s revenue grew at a CAGR of 10 %. The Company has reserves in excess of Rs. 105.49 Cr and operates with negligible debt on its books.

Particulars (in Rs. Cr.) 2014 2015 2016
Income from operations 518.40 505.92 435.40
EBITDA 42.61 23.46 21.85
PAT 21.32 6.62 4.37
EPS 3.00 1.00 1.00
Equity Share Capital 13.64 13.65 13.67
Reserves & Surplus 98.11 104.41 105.49
Total Debt 7.09 1.47 6.29
EBITDA Margin (In %) 8.23 4.68 4.69
PAT Margin (In %) 4.18 1.91 1.27
Return on capital employed (In %) 16.86 5.18 3.31
Return on Shareholders’ funds (In %) 19.08 5.60 3.66
Current Ratio 4.75 5.37 3.67

Strong Relationship with Customers

Gravita India has built robust relationship and confidence with customers by providing them the entire range of lead products with quality control checks globally. Gravita client base includes Exide, Yuasa, Hindustan Zinc, Hitachi, Panasonic, Tata Batteries, Johnson Controls, Sebang, Glencore, Schiender Electric and Trafigura.

WHAT’S GOING AGAINST THE STOCK

Intense Competition

Some of the domestic competitors include Nile Limited, Metrade India Limited, Leadage Alloys India Limited, Chloride Metals Ltd., Pondy Oxides and Chemicals Limited. Gravita also faces competition in overseas market players.

Industry Challenges

The key challenges for the Indian Lead industry include the following:

  • Lack of exclusive policy for recycling industry which includes proper scrap collection centers, formal organized industry structure and proper implementation of environmental compliances
  • Competition with unorganized sector
  • Technological upgradation and skilled manpower