GRAVITA - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 4.1
| Stock Code | GRAVITA | Market Cap | 12,258 Cr. | Current Price | 1,660 ₹ | High / Low | 2,170 ₹ |
| Stock P/E | 40.7 | Book Value | 231 ₹ | Dividend Yield | 0.38 % | ROCE | 21.4 % |
| ROE | 18.5 % | Face Value | 2.00 ₹ | DMA 50 | 1,687 ₹ | DMA 200 | 1,741 ₹ |
| Chg in FII Hold | 1.10 % | Chg in DII Hold | -0.16 % | PAT Qtr | 72.2 Cr. | PAT Prev Qtr | 87.2 Cr. |
| RSI | 51.2 | MACD | -35.5 | Volume | 1,27,178 | Avg Vol 1Wk | 2,18,528 |
| Low price | 1,380 ₹ | High price | 2,170 ₹ | PEG Ratio | 0.61 | Debt to equity | 0.11 |
| 52w Index | 35.5 % | Qtr Profit Var | 111 % | EPS | 40.8 ₹ | Industry PE | 20.4 |
📊 Analysis: Gravita shows strong fundamentals with ROCE at 21.4% and ROE at 18.5%, reflecting efficient capital utilization. The company is nearly debt-free (0.11 debt-to-equity), ensuring financial stability. EPS of 40.8 ₹ supports earnings strength, and the PEG ratio of 0.61 suggests fair valuation relative to growth. P/E of 40.7 is premium compared to industry PE (20.4), indicating overvaluation. Dividend yield of 0.38% is modest. Quarterly PAT declined (72.2 Cr. vs 87.2 Cr.), but YoY profit variation remains strong at 111%. Technicals show consolidation below DMA 50 (1,687 ₹) and DMA 200 (1,741 ₹), with RSI at 51.2 indicating neutral momentum.
💰 Entry Price Zone: Ideal accumulation range is 1,550 ₹ – 1,600 ₹, closer to support levels and below DMA averages for margin of safety. Current price (1,660 ₹) is slightly above this zone, so staggered buying is advisable.
📈 Exit / Holding Strategy: For existing holders, maintain positions with a medium-to-long-term horizon (3–5 years). Partial profit booking can be considered near 2,100 ₹ – 2,150 ₹ (recent highs). Dividend yield is modest, so focus remains on capital appreciation supported by efficiency and growth metrics.
✅ Positive
- Strong ROCE (21.4%) and ROE (18.5%)
- Debt-light balance sheet (0.11 debt-to-equity)
- EPS of 40.8 ₹ supports valuation strength
- PEG ratio of 0.61 indicates fair valuation relative to growth
- FII holdings increased (+1.10%)
⚠️ Limitation
- P/E of 40.7 is premium compared to industry PE (20.4)
- Dividend yield of 0.38% offers limited income
- Quarterly PAT declined (72.2 Cr. vs 87.2 Cr.)
- Stock trading below DMA 200, showing weak momentum
📉 Company Negative News
- Decline in DII holdings (-0.16%)
- MACD negative (-35.5), showing bearish sentiment
- Quarterly earnings contraction despite strong YoY growth
📈 Company Positive News
- YoY profit growth of 111%
- FII confidence increased (+1.10%)
- Strong 52-week performance (35.5% index)
🏭 Industry
- Recycling and metals sector enjoys long-term demand stability
- Industry PE at 20.4 highlights moderate valuation levels
- Sector rotation favors sustainable and resource-efficient businesses
🔎 Conclusion
Gravita is a fundamentally strong, debt-light recycling and metals stock with efficient capital utilization and strong YoY profit growth. While valuations are premium and near-term earnings show weakness, long-term prospects remain attractive. Ideal strategy: accumulate near 1,550–1,600 ₹, hold for 3–5 years, and book partial profits near highs (2,100–2,150 ₹). Best suited for investors seeking capital appreciation in sustainable industries with modest dividend support.