GRAVITA - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 4.2

📊 Core Financials

• Revenue & Profit Growth: Quarterly PAT rose from 68 Cr. to 87.2 Cr. (↑ 28%), YoY profit variation at 72.4% shows strong growth momentum.
• Margins: ROCE at 21.4% and ROE at 18.5% highlight efficient capital utilization and strong profitability.
• Debt Ratios: Debt-to-equity at 0.11 reflects very low leverage, ensuring financial stability.
• Cash Flows: Dividend yield at 0.36% is modest, but rising profits indicate healthy operating cash generation.

💹 Valuation Indicators

• P/E Ratio: 51.0, significantly higher than industry PE of 20.0, suggesting premium valuation.
• P/B Ratio: Current Price / Book Value ≈ 7.9, trading at a steep premium to book value.
• PEG Ratio: 0.76, indicates valuation is reasonable relative to growth prospects.
• Intrinsic Value: Based on EPS (₹35.6) and industry PE, fair value ≈ ₹710–720, implying current price is overvalued.

🏢 Business Model & Competitive Advantage

• Gravita India specializes in recycling lead, aluminum, and plastics, with strong focus on sustainability.
• Global presence and cost-efficient recycling processes provide competitive advantage.
• Strong ROCE and ROE highlight operational efficiency and sector leadership.

📈 Entry Zone & Holding Guidance

• Entry Zone: Attractive below ₹1,500–1,600, closer to intrinsic value and DMA200 support (₹1,761).
• Long-Term Holding: Suitable for investors seeking exposure to recycling and sustainability themes, but valuation risk exists at current levels.

✅ Positive

• Strong quarterly and annual profit growth (↑ 72.4%).
• Low debt-to-equity ratio (0.11).
• High ROCE (21.4%) and ROE (18.5%).
• DII holdings increased (+0.46%), showing domestic institutional confidence.

⚠️ Limitation

• P/E ratio (51.0) well above industry average (20.0).
• P/B ratio ≈ 7.9, steep premium to book value.
• Dividend yield at 0.36% is low, limiting income potential.

📉 Company Negative News

• FII holdings reduced (-0.44%), showing declining foreign investor interest.
• Valuation stretched compared to intrinsic value.

📢 Company Positive News

• Strong quarterly profit growth and improved operational efficiency.
• DII holdings increased (+0.46%), reflecting domestic investor support.

🏭 Industry

• Industry PE at 20.0, lower than company’s valuation.
• Recycling and sustainability sector benefits from global demand for eco-friendly solutions.
• Sector growth supported by government initiatives and rising environmental awareness.

🔎 Conclusion

• Gravita India shows strong fundamentals with robust profitability, low debt, and efficient operations.
• However, current valuation is stretched compared to intrinsic value and industry peers.
• Entry recommended below ₹1,500–1,600; long-term hold viable for exposure to sustainability-driven growth.