Buy Gravita India, target price Rs 380: Emkay Global

Emkay Global has buy call on Gravita India with a target price of Rs 380. The current market price of Gravita India Ltd. is Rs 240.75.

Time period given by analyst is one year when Gravita India Ltd. price can reach defined target.

Gravita India Ltd., incorporated in the year 1992, is a Small Cap company (having a market cap of Rs 1662.09 Crore) operating in Metals - Non Ferrous sector.


Gravita India Ltd. key Products/Revenue Segments include Lead, Aluminium, Plastics, Turnkey Project, Export Incentives, Scrap, Others, Job Work, Sale of services for the year ending 31-Mar-2021.


Financials
For the quarter ended 30-09-2021, the company reported a Consolidated Total Income of Rs 550.26 Crore, up 22.98 % from last quarter Total Income of Rs 447.43 Crore and up 58.40 % from last year same quarter Total Income of Rs 347.38 Crore. Company reported net profit after tax of Rs 38.99 Crore in latest quarter.

Investment Rationale
The TP comprises Rs330/share from the current business (explicitly modeled in forecasts), and Rs50/share from new businesses. It estimates potential for Rs1bn+ PAT from new ventures in FY26, requiring incremental investment of Rs5.5bn. Key downside risks: 1) Volatility in volumes/margins led by commodity prices - hedging strategies plus an increase in the share of value-added products would help mitigate this risk; 2) project delays; and 3) adverse regulations.

Promoter/FII Holdings
Promoters held 73.0 per cent stake in the company as of 30-Sep-2021, while FIIs owned 0.86 per cent, DIIs 0.25 per cent.