Leading recycling star: Will CAGR of 42.11 be able to beat CAGR of 18.46

ABOUT THE COMPANY

GRAVITA INDIA LIMITED is a leading global recycling company specializing in lead recovery from lead-acid batteries and with aluminium alloys, plastic granules, and rubber recycling. Due to the demand of the recycled products amid global shift towards sustainability the company has seen a robust growth since incorporation, its share price went from ₹15 in 2011 to ₹2700 in 2024. The company has operations across 70+ countries, making it one of the largest lead producers in India. Market capitalization of the company is ₹12,244 crores and an order book of 60,000 metric tons (MT). Company has a P/E ratio of 36.2 while its peer PONDY OXIDES & CHEMISTRY LIMITED has a P/E ratio of 49.5 indicating that the company is undervalued when compared to its peer, combined analysis of the P/E ratio and its order book indicates toward its growth in the long run.

Analysis of the Financial Statements

Revenue Growth Trend
Revenue showed moderate growth from 1,348 crores in 2020 to 3,869 crores in 2025 with a CAGR for revenues standing at 42.11%, while its competing company Pondy Oxides & Chemicals Ltd has a 5-year CAGR of 18.46%. CAGR rate can be a good sign for the retail investors, indicating that the company is ahead of its competitors. Growth has been driven due to the global shift towards sustainability and will surely show the same results in the future. Revenue of the company is expected to rise in the future as the order size is very high and the company has an aggressive expansion plan, aiming to reach capacity of 500,000+ MTPA by FY27.
March 2020March 2021March 2022March 2023March 2024March 2025
1,348 CRORES1,410 CRORES2,216 CRORES2,801 CRORES3,161 CRORES3,869 CRORES
Profitability & Margin Analysis
Operating profits of the company have been remained constant at 8-10%, being 8% in the past March 2025 while its competing firm Pondy Oxides & Chemicals Ltd has an Operating Profit Ratio of 5% in March 2025. This is a sign that the management is focused on cost efficiency and increasing the profit, which would help company to scale profit faster when the sales increase as the fixed cost burden is already minimized. EBITDA per tonne for Q3 2025 stands at Lead: ₹19,030/MT, Aluminium: ₹10,353/MT and Plastic: ₹20,861/MT.
March 2020March 2021March 2022March 2023March 2024March 2025
8%9%10%7%9%8%
Balance Sheet Strength
The total assets of the company have grown from 614 crores in March 2020 to 2,515 crores in March 2025, showing subsequent capital investment. This subsequent growth is majorly due to the investment in the fixed assets rather than only in the working capital which shows company ability to support expanded operations. This asset appreciation plus cutting operational costs can build a solid foundation for future earnings growth, provided execution stays on track. The expanded assets base delivered return on capital employed (ROCE) of 21.5%, which shows a strong foundation for the growth of the company.

Debt Profile

Borrowings of the company had decreased from 548 crores in March 2024 to 286 crores in March 2025, indicating that the company is moving towards debt free structure. Reserves showed a sharp increase from 211 crore to 2,055 crores in 5 years, indicating a large portion of the assets are financed through retained earnings and not only through debt while its competitor Pondy Oxides & Chemicals Ltd reserves as of March 2025 is 583 Crores. This makes the balance sheet of the Gravita India Ltd healthier than if it was purely debt-driven. This conservative approach of the company may cap the aggressive growth opportunity compared to the leveraged peers.

Cash Flow Health

Operating cash flow of the company has been increasing sharply, i.e. 34 crores in March 2020 to 282 crores in March 2025, which shows that the company is easily able to convert its profit into cash. Cash Conversion Cycle of the company has shown a decrease in the past years when compared to its peers, company has a higher cash conversion cycle, weakening liquidity and affecting company reserves.

Analysis of the Company Management (Investors presentation/Disclosures-based view)

Recent conference calls highlighted:

  • Management highlighted that the company has invested for capacity expansion and operational enhancements.
  • Management emphasized on acquiring larger orders and diverse procurement channels to reduce customer concentration risk versus a small recycler.
  • The company wants to venture into New recycling verticals in Rubber, Lithium, Steel & Paper.
  • Management concalls reflect a high level of integrity towards its shareholders and the same has been reflected through stock growth along with the company growth. No red flags can be noted on the management of the company.

Summary Table: Key Financials

Metric  FY24FY25Trend
Revenue (₹ crore)3,1613,869Growing
Operating Margin (%)98Slight fall
Net Profit (₹ crore)242313Growing
Total Assets (₹ crore)1,6022,515Growing
Debt/Equity Ratio0.650.14Falling
Reserves (₹ crore)8242,055Strong
Cash Flow (₹ crore)42282Strong

Disclaimer: The article is for informational purposes only and not investment advice. 

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