Gravita India Ltd (GRAVITA) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator (Antique Stock Broking Limited): Ladies and gentlemen, good day and welcome to Gravita India Limited Q2 FY '27 Earnings Conference Call hosted by Antique Stock Broking Limited. As a reminder, all participants' lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Manish Mahawar from Antique Stock Broking Limited. Thank you and over to you, sir.
Manish Mahawar (Antique Stock Broking Limited): Thanks, Modator. Warm welcome to all the participants on the 2Q FY '27 earnings call of Gravita India. We have with us leadership team represented by Mr. Yogesh Malhotra, Whole Time Director and CEO, Mr. Sunil Kansal, Whole Time Director and CFO, Mr. Naveen Sharma, Executive Director, Non-board Member and Mr. Anand Jain, Investor Relations on the call. Without any delay, I would like to hand over the call to Mr. Malhotra for opening remarks. Post which we'll open the floor for Q&A. Thank you, and over to you, Yogesh ji.
Yogesh Malhotra (Gravita India Ltd): Thank you, Mr. Manish. Good afternoon, everyone, and welcome to our Q2 and F H1 FY '27 earnings call. Thank you for joining us today. I hope you have had the opportunity to review our financial results and investor presentation which have been uploaded to the stock exchanges. During today's call, I will take you through the key business developments, strategic initiatives, operational highlights and financial performance for the quarter and half year. Following my remarks, we will be happy to take your questions.
Yogesh Malhotra (Gravita India Ltd): We are pleased to share that Gravita has delivered resilient performance in Q2 and H1 FY '27, navigating an evolving global environment and supply chain challenges, while continuing to execute its long-term growth strategy. During H1 FY '27, our revenue, EBITDA, and PAT grew by 40%, 29%, and 10% respectively, supported by an improved product mix, operational efficiencies, and contribution from our diversified recycling businesses. While geopolitical developments and logistics disruptions have impacted the availability and movement of recyclable materials, we have been actively working to diversify our sourcing geographies and strengthen our procurement network. Alongside sourcing from India and other international markets, we are expanding our presence in developed economies by establishing additional scrap procurement yards. These initiatives are aimed at improving sourcing resilience, reducing dependence on individual geographies, and supporting better utilization of our expanded manufacturing capacities over the longer term. Our performance reflects the strength of our diversified recycling platform and our ability to adapt to challenging market conditions, while remaining focused on profitability, operational excellence, and disciplined capital allocation. Going forward, we will continue to strengthen our core businesses, expand our presence across products and geographies, and increase the contribution of value-added products as we progress towards Vision 2030. Before discussing our financial performance in detail, let me first walk you through the key strategic developments during the quarter that continue to strengthen our growth trajectory. Our strategic expansion in copper recycling continues to progress well. The initiatives across Mundra and Mandvi are designed to strengthen integration across the copper value chain. At Mundra, we have announced plans to add 59,200 metric ton per annum of copper recycling capacity with an estimated investment of approximately INR 64 crores, to be funded through internal accruals. The capacity is expected to be commissioned in phases by March 2029. This expansion will support raw material sourcing for our proposed Mandvi plant and further strengthen integration across our copper recycling operations, enabling us to cater to growing demand in domestic and international markets. At Mandvi, Gujarat, work is progressing on our 29,400 metric ton per annum copper recycling facility with an estimated investment of approximately INR 160 crores. The project remains on track for commissioning within the next 12 months, as previously guided. Funded through internal accruals, the facility will strengthen backward integration, expand our value-added product portfolio, and support long-term profitable growth. We have approved an additional investment of approximately INR 94.42 crores to subscribe to the rights issue of Rashtriya Metal Industries Limited, against a total rights issue of approximately INR 94.81 crores. The proceeds will support RMIL's strategic initiatives and general corporate purpose, purposes, further strengthening our presence in the copper and copper alloys segment. We remain very optimistic on lithium-ion battery recycling space, a segment poised to grow alongside the rapid rise in EV, electric vehicles. As battery feedstock availability increases, we will scale towards higher value recovery and processing, positioning this business as a key contributor to Gravita's future growth. In line with our long-term expansion strategy, we have earmarked total earmarked total capital expenditure of INR 1,680 crores through FY '29. Of this, INR 815 crores will be allocated towards strengthening and expanding our existing businesses, with the balance directed towards entering new recycling verticals, including lithium-ion battery and copper. The 57th GST Council has recommended bringing electrical and electronic waste scrap under the reverse charge mechanism for procurement from unregistered suppliers. This will exponentially enhance our domestic procurement and fast track the shift from formal to informal. We are also strengthening our international sourcing capabilities. The board will the board has approved the incorporation of a wholly-owned subsidiary in the United States, proposed to be named Gravita Recyclers USA, Inc. with an initial capital of US$50,000. The proposed entity will focus on setting up scrap procurement network
Yogesh Malhotra (Gravita India Ltd): in the US and other neighboring countries. It is expected to support our international procurement network, broaden sourcing options, and improve supply chain across our recycling businesses. Reinforcing financial stability, RML has received an ICRA Stable AA rating for its long-term facilities and an ICRA A1+ rating for its short-term facilities, underscoring its strong credit profile. Coming to operational performance, our overall operating performance during Q2 and H1 FY '27 reflected the contribution of our expanded manufacturing base, improved operating efficiencies, and continued focus on product mix. Total volumes increased by 3% year-on-year to 52,199 metric ton per annum in Q2 FY '27. While the availability and movement of scrap continued to influence operating levels in certain businesses, we remained focused on optimizing production, maintaining profitability, and improving the utilization of our manufacturing facilities. Production and sales also recorded sequential growth during Q2 FY '27. Value-added products contributed 64% of total sales in H1 FY '27, reflecting continued progress in improving the product mix. The plastic segment continued its strong growth momentum in Q2 FY '27 driven by sustained demand and improved operational performance. The copper segment operated at 50% capacity utilization during H1 FY '27, with sales increasing by 12% following our strategic entry into copper through RML. We are focused on improving operational integration, leveraging procurement and manufacturing synergies, and progressively scaling the business. As capacity utilization improves and our planned recycling infrastructure comes onstream, we expect copper to become an increasingly important contributor to our consolidated performance. In terms of profitability, EBITDA per ton for the lead, aluminum, plastic, and copper segment stood at ₹22,620, ₹22,664, ₹10,334, and ₹84,671 respectively during Q2 FY '27. Moving to the consolidated financial performance for Q2 FY '27, revenue grew by 38% year-on-year to ₹1,427 crores, supported by the contribution from our diversified businesses, higher capacity utilization across key segments, and continued operational efficiencies. Value-added products contributed 64% of consolidated revenue during the period, marking further progress towards our Vision 2030 target and deriving approximately 60% plus of revenue from value-added offerings. RML contributed ₹420 crores to consolidated revenue during Q2 FY '27 with an EBITDA margin of 8.5%. Its contribution strengthens our presence in the copper and copper alloy segment and further diversifies our revenue base beyond our traditional recycling businesses. Adjusted EBITDA increased 28% year-on-year to ₹143.37 crores with EBITDA margin remaining healthy at over 10%. Consolidated PAT grew 6% year-on-year to ₹102 crores while PAT margin remained over 7%. Looking ahead, we remain confident in our ability to deliver on Vision 2030 and sustain our long-term growth trajectory. Our priorities remain clear: strengthening our leadership in core recycling businesses, expanding into high-growth verticals, increasing the contribution of value-added products, and building a more resilient international sourcing network. With a strong pipeline of capacity additions, deeper integration across the copper value chain, the development of lithium-ion battery recycling capabilities, and continued emphasis on operational excellence and capital discipline, we believe Gravita is well positioned to capitalize on the growing global circular economy opportunity and create sustainable long-term value for our stakeholders. That's all from my end, and I would now request the moderator to open the floor for questions and answers. Thank you, and over to you, Mr. Moderator.
Moderator (Antique Stock Broking Limited): Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will
Moderator (Antique Stock Broking Limited): for a moment while the question queue assembles.
Moderator (Antique Stock Broking Limited): The first question is from the line of Amit Dixit from GS, please go ahead.
Amit Dixit (GS): Yeah, hi. Good afternoon everyone and thanks for the opportunity. First of all, sir, congratulations for a good set of numbers in a very testing operating environment. Two questions from my side. The first one is on the West Asia crisis and the impact that we have on, you know, sourcing of scrap or maybe the exports. So, what kind of impact do you see? Has it reduced compared to the last quarter since we might have taken some steps to navigate that? And how we are, you know, m- thinking of of of navigating it or or mitigating some of that impact?
Yogesh Malhotra (Gravita India Ltd): Yeah. Thank you, thank you. So, basically, of course, what we've done is that we have, you know, expanded our, procurement network, internationally. And we've gone to geographies from where we were not earlier, picking up material because, for various reasons. One of them is because it's a a little costlier, proposition compared to the territories where we were, present. And you know establishing new areas, new geographies take some time. But the good news is that not now that that part is over. So although as far as the Gulf region is concerned, we are still not getting much scrap or raw material from these areas, but we are developing new areas and some of the materials will start coming in Q3, but major, I mean so the there may be some delay in in those material reaching to us in our factory, but the bookings have started in in last quarter itself. But another good news is that even in the domestic market, if you see the reverse charge mechanism has although it's not been notified, but it has come through for battery scrap also. And we've seen a a good reaction to that in the domestic market, and we hope that in Q3, Q4 and in the in the next year itself, we will see a huge volume coming from from domestic market also, because now the disparity between the unorganized sector and organized sector is not there. So, we are very confident that we will turn around this issue in in the next couple of quarters. So, but what I can say is that the worst is over. Now, the there will be some improvement in the overall you know, volumes from lead also going forward.
Amit Dixit (GS): Right. So the second question is essentially on lead volumes. So if I look at lead volumes, I mean for Q2, it is lowest since last several quarters, 11% down YoY, QoQ. So just wanted to understand if this is a one-time blip that we are seeing or there is some you know, in short term we might see lead volumes at these low levels?
116 more turns of this transcript: log in to Stocksigma to read the full call.