GRAVITA

Gravita India Ltd (Gravita), a prominent leader in India's recycling industry, is wellplaced to leverage strong industry growth and rising momentum through its global and pan-India operations, supported by a comprehensive procurement network. With the implementation of Environmental Compensation (EC) for EPR noncompliance, the availability of domestic scrap has improved, leading to a 60% increase in domestic scrap sourcing by Gravita in FY25. This shift to domestic sourcing is expected to improve working capital days from 85 in FY25 to 77/76 in FY26/FY27, thereby enhancing cash flow from operations to INR3.6b/INR3.1b from INR2.8b in FY25. We expect a revenue/EBITDA/PAT CAGR of 30%/29%/32% over FY25-27. We value the stock at 31x FY27 EPS to arrive at our TP of INR2,300. We reiterate our BUY rating on the stock.