GRAVITA - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.1
| Stock Code | GRAVITA | Market Cap | 12,130 Cr. | Current Price | 1,643 ₹ | High / Low | 2,071 ₹ |
| Stock P/E | 40.8 | Book Value | 250 ₹ | Dividend Yield | 0.39 % | ROCE | 19.6 % |
| ROE | 17.3 % | Face Value | 2.00 ₹ | DMA 50 | 1,617 ₹ | DMA 200 | 1,660 ₹ |
| Chg in FII Hold | -1.81 % | Chg in DII Hold | 0.44 % | PAT Qtr | 69.7 Cr. | PAT Prev Qtr | 72.2 Cr. |
| RSI | 49.7 | MACD | 16.8 | Volume | 1,22,004 | Avg Vol 1Wk | 1,54,693 |
| Low price | 1,267 ₹ | High price | 2,071 ₹ | PEG Ratio | 0.95 | Debt to equity | 0.18 |
| 52w Index | 46.8 % | Qtr Profit Var | -5.24 % | EPS | 40.2 ₹ | Industry PE | 19.3 |
📊 Financials: Gravita India shows solid fundamentals with quarterly PAT of ₹69.7 Cr. versus ₹72.2 Cr., reflecting slight contraction. Debt-to-equity is low at 0.18, ensuring financial stability. ROE at 17.3% and ROCE at 19.6% are healthy, indicating efficient capital utilization. Cash flows remain steady, supported by recycling and lead manufacturing operations.
💹 Valuation: The stock trades at a P/E of 40.8, significantly above the industry average of 19.3, suggesting premium valuation. P/B ratio is ~6.57 (Price ₹1643 / Book Value ₹250), which is high. PEG ratio of 0.95 indicates fair growth-adjusted valuation. Intrinsic value analysis suggests the stock is slightly overvalued but supported by strong earnings momentum.
🏢 Business Model: Gravita operates in recycling and manufacturing, focusing on lead, aluminum, and plastic recycling. Its competitive advantage lies in cost efficiency, sustainability-driven demand, and global presence. The company benefits from rising demand for recycled materials, though profitability is sensitive to commodity cycles.
📈 Entry Zone: With DMA 50 at ₹1617 and DMA 200 at ₹1660, the stock is trading near averages, reflecting consolidation. RSI at 49.7 indicates neutral momentum, while MACD at 16.8 suggests mild bullishness. Accumulation near ₹1550–₹1600 offers a favorable entry zone for long-term investors.
Positive
- 🚀 Strong ROE (17.3%) and ROCE (19.6%).
- 💰 Low debt-to-equity ratio of 0.18 ensures stability.
- 📈 PEG ratio of 0.95 highlights fair valuation relative to growth.
- 🌍 Sustainability-driven demand supports long-term growth.
Limitation
- ⚠️ High P/E (40.8) compared to industry average (19.3).
- 📉 Slight contraction in quarterly PAT (₹69.7 Cr. vs ₹72.2 Cr.).
- 🔄 Dividend yield at 0.39% is modest for income investors.
- 📉 Exposure to commodity cycles may impact margins.
Company Negative News
- ⚠️ No major recent negative news, though profit contraction is a concern.
Company Positive News
- ✅ Increase in DII holdings (+0.44%) reflects institutional confidence.
- 📈 Strong global presence in recycling and sustainability-focused operations.
Industry
- 🏭 Recycling industry benefits from sustainability trends and regulatory support.
- 📊 Industry P/E at 19.3 reflects conservative valuation outlook.
- 🌍 Commodity-linked volatility impacts sector profitability.
Conclusion
Gravita India demonstrates solid fundamentals with strong return metrics, low debt, and sustainability-driven demand. While valuations are stretched compared to industry peers, PEG ratio suggests fair growth-adjusted value. Entry around ₹1550–₹1600 is favorable, and long-term holding is recommended for investors seeking exposure to recycling and sustainable manufacturing with global reach.
Would you like me to expand this with a peer comparison against other recycling and manufacturing companies or a technical analysis focusing on chart momentum and support levels?