The rally was sparked by Axis Securities’ initiation of coverage on Gravita India with a bullish outlook. Analysts at Axis Securities recommended investors to buy Gravita India shares with a target price of Rs 3,000 per share, indicating a potential upside of 20 per cent from the previous day’s closing price, and around 15.38 per cent from today’s intraday high.
Analysts believe that Gravita is well-positioned to capitalise on the burgeoning recycling industry, driven by global shifts toward sustainability and circular economies. With planned capacity expansions and diversification into newer verticals, analysts said, the company is set to benefit from favourable industry dynamics and rising demand for sustainable solutions.
“We are confident in Gravita’s potential, attributing our BUY rating to its dominant market position, improving profitability, favourable regulatory landscape, and diversified offerings. The stock currently trades at a reasonable valuation, and we project a target price of Rs 3,000/share based on a 37x FY27E EPS multiple, highlighting the significant upside of 20 per cent from the CMP,” said Axis Securities in a note.
Meanwhile, here are the top factors for initiating the coverage:
Growing domestic and global recycling market
The global recycling market is on an accelerated growth trajectory, fueled by advancements in technology and increasing regulatory pressures. Analysts believe that despite being fragmented and underdeveloped, the industry presents significant opportunities for organised players like Gravita..
Conducive regulatory environment
According to analysts at Axis Securities, the global push for recycling is gaining momentum, supported by initiatives such as Extended Producer Responsibility (EPR) and incentives under the Battery Waste Management Rules (BWMR). These regulations not only encourage recycling but also aim to formalise the sector, providing organised players like Gravita with a significant competitive advantage. Analysts believe that such regulatory support is expected to facilitate volume growth and improve resource utilisation, benefiting companies with established recycling capabilities.
Well-spread crap collection and production network
Gravita operates a robust global network with 11 manufacturing plants in 32 countries and over 250,000 MT of scrap collection capacity. Analysts opined that the company’s efficient scrap collection system, supported by dedicated yards and numerous touchpoints, enables effective service delivery to OEM customers while optimising logistical costs.
Newer Segments to boost growth
At 11:50 AM, shares of Gravita India were trading 2.92 per cent higher at Rs 2,568.35 per share on the NSE.
First Published: Sep 25 2024 | 12:00 PM IST
