GRAVITA - Investment Analysis: Buy Signal or Bull Trap?

Last Updated Time : 19 Sept 25, 2:16 pm

Investment Rating: 4.4

Here's a detailed breakdown of Gravita India Ltd's long-term investment potential

📊 Fundamental Analysis

Strong Profitability Metrics

ROCE: 21.4% and ROE: 18.5% — both indicate efficient capital usage and solid returns.

PEG Ratio: 0.82 — suggests undervaluation relative to growth, a bullish sign for long-term investors.

EPS: ₹31.1 — healthy earnings per share for a mid-cap stock.

Valuation Concerns

Stock P/E: 54.9 vs Industry P/E: 21.4 — indicates overvaluation unless growth sustains.

Book Value: ₹216 vs CMP ₹1,682 — high price-to-book ratio, typical for growth stocks but demands caution.

Dividend Yield: 0.38% — low, signaling reinvestment into growth rather than income generation.

Debt to Equity: 0.01 — virtually debt-free, which is excellent for long-term stability.

📉 Technical & Trend Analysis

Current Price: ₹1,682 is below both DMA 50 (₹1,730) and DMA 200 (₹1,801), indicating bearish momentum.

RSI: 46.1 — neutral zone, not oversold or overbought.

MACD: -23.8 — bearish crossover, suggesting short-term weakness.

Volume: Stable, with no major spikes or drops.

💡 Ideal Entry Price Zone

Given the bearish technicals and long-term fundamentals

Entry Zone: ₹1,400–₹1,550

This range is close to the 52-week low and offers a margin of safety.

Wait for RSI to dip below 40 or MACD to flatten before entering.

🧭 Exit Strategy / Holding Period

If you're already holding GRAVITA

Holding Period: Minimum 3–5 years

The company is expanding into lithium and rubber recycling, with a ₹1,500 Cr. capex plan by FY28

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Regulatory tailwinds like Battery Waste Management Rules support long-term growth.

Exit Strategy

Partial Exit near ₹2,300–₹2,500 (Motilal Oswal target: ₹2,300

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Full Exit if ROCE or ROE drops below 15% or PEG rises above 1.5.

Trailing Stop Loss: ₹1,380 (52-week low) to protect downside.

🧠 Final Take

Gravita India is a high-growth, ESG-aligned industrial play with strong fundamentals and ambitious expansion plans. While current valuations are stretched, its PEG ratio and debt-free status make it a compelling long-term candidate — especially if entered near support levels.

Let me know if you'd like a comparison with similar mid-cap industrial stocks or a portfolio allocation strategy!

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www.jmfinancialservices.in

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tradebrains.in

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