Strong fundamentals, attractive valuations makes Gravita India a strong buy; Hem Securities sees 73% upside in this multibagger stock

Brokerage firm Hem Securities expects an upside of over 73 per cent in Gravita India on the back of attractive valuations and strong fundamentals. This multibagger stock has surged almost 245 per cent in the last one year as compared to over 16 per cent rise in the S&P BSE Sensex. 

Hem Securities initiates a Buy on the stock which is currently trading at 18.54x of FY22E EPS and is available at 10.36x of FY23E EPS and 9.27x of FY24E EPS. It sets a target price of Rs 600 apiece with 24 months view, which implies 73 per cent upside, the brokerage said. 

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The stock on Tuesday touched its day’s high level of Rs 355.8 per share as against Rs 352.8 per share, Monday’s closing. At around 2:56 pm, the stock is down over 1.5 per cent to Rs 347.4 per share as compared to 1 per cent rise in the S&P BSE Sensex. 

The brokerage expects Gravita to grow at decent CAGR (Compound Annual Growth Rate) of 25 per cent in top line while bottom-line may grow at 35per cent CAGR from FY22 to FY24E. 

“In FY21, Gravita has posted a strong set of numbers with ROE (Return on Equity) and ROCE (Return on Capital Employed of 21 and 20 per cent, respectively which gives a set of belief in the strong fundamentals of the company.” Hem Securities said in its note. 

Gravita India is a global leading non‐ferrous secondary metal and one of India’s largest secondary Lead metals producing company. Incorporated in 1992, the company is engaged in the recycling of Used Lead Acid Batteries, Cable Scrap/other Lead Scrap, Aluminum Scrap and Plastic Scrap, etc.  

Gravita India has 12 strategically located recycling facilities in Asia, Africa, and Central America with a capacity of 121,819 MTPA (Million Tonnes Per Annum) for Lead, 19,200 MTPA for Aluminium, and 21,600 MTPA for Plastic.