Gravita India's Copper Move: Nuvama Sees 62% Upside by 2028

Introduction: Gravita's Strategic Pivot to a Multi-Commodity Player

Gravita India, a company historically known for its dominance in lead recycling, is undertaking a significant strategic transformation. The company is expanding its operations to become a multi-commodity recycling powerhouse, with a major new focus on copper. This shift is highlighted by its recent acquisition of Rashtriya Metal Industries Limited (RMIL) for ₹565 crore, a move that positions Gravita to capitalize on the surging demand for copper driven by the electric vehicle (EV) and renewable energy sectors. This diversification is not just an expansion but a fundamental reshaping of its business model, aiming to reduce dependency on lead and unlock new avenues for substantial growth.

The Landmark RMIL Acquisition

Gravita's entry into the copper market is anchored by the acquisition of RMIL, a company with a long history in manufacturing copper and its alloys since 1946. RMIL reported a turnover of ₹910 crore in FY25, providing Gravita with an immediate and substantial foothold in the sector. The integration of RMIL’s 31,200 tonnes per annum (TPA) capacity will significantly boost Gravita's recycling capabilities. Furthermore, with approximately 40% of RMIL's business coming from exports, Gravita gains enhanced access to global markets. This strategic purchase is a clear signal of the company's intent to become a leading player in the broader metals recycling landscape.

Ambitious Growth Projections

Financial analysts are taking note of Gravita's aggressive expansion. Brokerage firm Nuvama forecasts that the new copper operations, combined with other capacity expansions, will propel the company's volume growth to a compound annual growth rate (CAGR) of 32% between FY26 and FY28. This is a significant acceleration from the 12% CAGR recorded between FY22 and FY26. The new capacities are expected to drive EBITDA and Profit After Tax (PAT) growth at an impressive 33% and 24% CAGR, respectively, during the same period. The copper vertical alone is projected to contribute ₹80-90 crore annually, accounting for about 12% of consolidated EBITDA by FY27.

Vision 2029: A Diversified Future

Beyond copper, Gravita's long-term strategy, dubbed 'Vision 2029', involves a comprehensive diversification into other high-growth recycling verticals. The company has already commissioned a 6,000 TPA lithium-ion battery recycling plant in Mundra, Gujarat, with an investment of ₹14 crore. This move is timed to serve India's rapidly expanding EV market, which is projected to see its battery recycling segment grow at a CAGR of 66.8% through 2030. The company is also scaling its rubber recycling business, aiming for a revenue contribution of ₹300-400 crore by FY28. The overarching goal is for non-lead segments to contribute over 30% of total revenue, with value-added products making up more than 50%.

Massive Capex and Capacity Expansion

To fuel this growth, Gravita has laid out a substantial capital expenditure plan of approximately ₹1,500 crore through FY28. A significant portion, around ₹1,000 crore, will be used to strengthen its core businesses, including a 45 ktpa expansion in its lead operations. The remaining capital will be channeled into developing new verticals. The company aims to more than double its current total capacity from around 3.34 lakh MTPA to over 7 lakh MTPA by FY28. This aggressive expansion is designed to solidify its market leadership and meet the growing demand for recycled materials in a circular economy.

| Key Growth Targets (Vision 2029) | | :--- | :--- | | Volume CAGR | Over 25% | | Profitability Growth | Over 35% | | Return on Invested Capital (ROIC) | Above 25% | | Non-Lead Business Share | Over 30% | | Value-Added Products Share | Over 50% |

Valuation and Market Perspective

Gravita's ambitious plans are reflected in its stock valuation, which trades at a significant premium compared to its industry peers. The company's Price-to-Earnings (P/E) ratio stands between 31.35 and 39.36, considerably higher than Hindalco Industries (11-13x) and Vedanta Limited (16-19x). This premium indicates that the market has priced in high expectations for future growth. While this presents a challenge, the company's consistent performance, including a 5-year PAT CAGR of over 53% and an ROIC consistently above 21%, provides a strong foundation for investor confidence.

Analyst Outlook: Strong Confidence Despite Near-Term Headwinds

Nuvama maintains a positive outlook on Gravita, setting a target price of ₹2,301, which represents a potential upside of 62% from current levels. The brokerage acknowledges potential short-term challenges, such as a weak March quarter (Q4FY26) due to volume loss in the Middle East and rising sea freight costs. However, these are viewed as temporary setbacks. The firm believes that growth will rebound strongly from FY27 as the new capacities become fully operational. The valuation reflects strong confidence in the management's ability to execute its diversification and expansion strategy successfully.

Conclusion: A New Chapter in Recycling

Gravita India is strategically repositioning itself from a lead-centric recycler to a diversified leader in the circular economy. Its bold entry into copper recycling, coupled with investments in lithium-ion and rubber, sets the stage for a new phase of accelerated growth. While the company's high valuation demands flawless execution, its clear vision, robust capex plan, and favorable industry tailwinds create a compelling narrative. Investors will be closely watching the timely commissioning of its new plants as Gravita works to deliver on its promise of becoming a multi-vertical recycling powerhouse.