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Leveraging recycling tailwinds across metals

Gravita India (GRAV), a leading player in India’s recycling industry, is building a multicommodity recycling platform, strategically diversifying beyond its core lead business into other commodities such as copper, rubber, etc. This direction positions the company well to capitalize on India’s rising recycling need.

* GRAV’s acquisition of a 99% stake in Rashtriya Metal Industries (RMIL) signals a strategic entry into copper, with potential to integrate backward into recycling by leveraging RMIL’s downstream capabilities. Thereby, it is expanding across the value chain from scrap to value-added products, unlike its core lead business, which is largely confined to primary products.

* RMIL (est. 1947) brings in a downstream platform with diversified end-use exposure across automotive, electricals, switchgear, connectors, HT cables, fashion accessories, horology (e.g., Titan), locks & keys (e.g., Godrej), coinage and defense, along with ~25% exports. Going ahead we expect the company’s utilization can improve (~40% in FY26 to ~65% by FY28E), supported by rising copper demand in end markets such as govt.’s power transmission investment of INR9.15t and rising EV penetration (EV requires 3x more copper than ICE).

* This strategic move is further reinforced by a favorable industry backdrop, structural copper deficits driven by energy transition demand, limited mine supply growth and higher copper intensity across applications. These factors make recycling a cost-efficient (~80-85% lower energy than primary) solution. With improving scrap availability and policy support, India’s secondary copper market is expected to scale up rapidly (~14% CAGR to ~55% share by FY30), validating GRAV’s potential foray into copper recycling as a timely and valueaccretive diversification.

* We expect a CAGR of 38%/36%/27% in revenue/EBITDA/PAT over FY26-28E. We value the stock at 27x FY28E EPS to arrive at our TP of INR2,200. We reiterate our BUY rating on the stock.

Valuation and view

* As a leading player in India’s rapidly growing recycling industry, GRAV is wellpositioned to capitalize on evolving market dynamics, driven by regulatory policy changes that are expected to increase the availability of domestic scrap, benefiting organized players such as GRAV.

* As GRAV acquired RMIL and announced capacity additions in copper recycling, it mitigates the risk of dependence on a single commodity, i.e., lead (FY26 EBITDA mix: 94% vs. 70% in FY28E). Copper also provides application diversification, as its use cases are spread across multiple end-use industries, whereas lead remains largely concentrated in lead-acid batteries, supporting a more diversified earnings profile and potential valuation re-rating over time.

* Going forward, we expect the company to report robust earnings growth on the back of:

1) strategic capacity expansion across verticals and geographies

2) an increased focus on value-added products

3) higher growth in new segments (copper and rubber).

* We expect a CAGR of 38%/36%/27% in revenue/EBITDA/PAT over FY26-28E. We value the stock at 27x FY28E EPS to arrive at our TP of INR2,200. We reiterate our BUY rating on the stock

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