# 1. Financial Performance ## A. Key Figures * Adjusted EBITDA: ₹223.51 Cr H1 FY'26 (+16%) · ₹111.81 Cr Q2 FY'26 (+10%) * PAT: ₹189.25 Cr H1 FY'26 (+36%) · ₹95.9 Cr Q2 FY'26 (+33%) ## B. Revenue Growth * **Strategic Product Shift:** Revenue mix increasingly driven by value-added products, now contributing **47%** toward the 50% Vision 2029 target. * **Overseas Contribution:** Overseas operations delivered **₹10 Cr PAT** in the quarter, underscoring growing international profitability. ## C. Profitability Trends * **Margin Resilience:** Strong PAT growth outpaces top-line, with margins expanding due to favorable product mix and operational efficiencies. * **Tactical Margin Optimization:** Recent margin spike to **₹23/kg** driven by arbitrage—selling overseas material in higher-value Indian markets at lower volumes. * **Value-Add Premium:** Value-added products deliver a **3–5% incremental gross margin**, reinforcing strategic focus on higher-margin offerings. * **Profit-Driven Operations:** Scrap import decisions prioritized on **EBITDA accretion**, not volume or foreign capacity utilization. ## D. Balance Sheet Strength * **Net Debt-Free Position:** Gravita India maintains financial flexibility with a strong, net debt-free balance sheet across core verticals. * **Capacity Rationalization:** Idle refining/alloying assets abroad being consolidated into India to boost margins and EBITDA efficiency. --- # 2. Volume & Product Mix ## A. Key Figures * **Total Volumes:** **4%** YoY growth (Q2 FY'26) * **EBITDA per Ton:** **₹23,196** lead · **₹14,786** aluminium · **₹10,122** plastics * **Revenue Mix:** **87%** lead · **9%** aluminium · **4%** plastic * **Overseas Revenue Share:** **30%** of total * **Value-Added Product Contribution:** **46%** of total volume (target: **50%**) ## B. Volume Trends & Market Dynamics * **Near-Term Volume Pressure:** Growth constrained by **single-digit** H1 expansion amid trade inventory drawdowns ahead of anticipated GST reduction on batteries. * **True Output Rising:** Actual production is increasing despite lower reported volumes due to elimination of intercompany transactions in consolidation. * **Strategic Volume Trade-Off:** Capacity limits lead to prioritization of **profitability over volume**, with selective processing of overseas-sourced material in India to boost margins. ## C. Product Margin Profile & Value Addition * **Lead Margin Resilience:** Sustained **INR19–INR20 per kg** EBITDA, supported by efficiency gains and rising value-added content. * **Aluminium Margin Divergence:** Overseas operations yield **INR14–INR15 per ton**, exceeding India’s **INR12–INR14 per ton** due to structural advantages. * **Plastic & Rubber Economics:** Sustainable EBITDA margins projected at **INR10–INR11 per kg** for plastic; rubber division targets **INR7–INR8 per kg** (~30% margin) pre-value addition. * **Copper’s Low Value-Add Reality:** Despite high revenue contribution from elevated prices, processing involves minimal value addition—limited to insulation removal and melting. ## D. Growth & Diversification Strategy * **Value-Add Expansion:** Company advancing beyond pyrolysis oil into **RCV and rubber sheets** to unlock incremental revenue streams. * **Margin Hierarchy Explained:** Lead offers superior percentage margins due to purification and value-added output, while copper’s higher absolute margins are diluted by its **4x–5x higher price base**. --- # 3. Capacity & Expansion ## A. Key Figures * **Mundra Lead Capacity Expansion:** **30,000 tpa** (Nov 2025) · **50,000 tpa** (Jan 2026) * **Phagi Lead Recycling Capacity Addition:** **45,000 tpa** (Dec 2026) * Current Installed Capacity: 3.40 lakh tpa · Target Capacity: >7 lakh tpa by FY28 * **Lead Recycling Capacity Target:** **~400,000 tpa by FY27** * **Future Capacity Mix (700,000 tpa):** **50,000 tpa lead** · **70,000 tpa aluminium** · **50,000 tpa plastics** · **100,000 tpa rubber** · **~30,000 tpa lithium-ion** ## B. Brownfield Projects * **Accelerated Ramp-Up:** Brownfield expansions at Mundra and Phagi enable immediate production scaling, with inventory buildup already underway ahead of commissioning. * **Robust Utilization Outlook:** New capacity expected to reach **60–70% utilization in FY27 H1**, supporting **~25% growth within one year** of operation. * **Import-Linked Investment:** Advances for imported scrap reflect strategic positioning for Mundra’s import-dependent operations ahead of capacity activation. * **Scrap Supply Tailwinds:** Anticipated shift in scrap flow removes raw material constraints, creating significant expansion opportunities for organized players. ## C. Greenfield Initiatives * **Limited Greenfield Pipeline:** Mundra remains the primary active Greenfield site; a new project in the **Dominican Republic** awaits approvals (expected Q4), with construction to follow. * **Strategic Geographic Expansion:** Company has acquired a tire recycler in Romania and is exploring new units or acquisitions in Eastern Europe for tire, lead, and aluminium recycling. * **Diversification Roadmap:** Plans to launch Greenfield projects in **steel and paper recycling next year**, and is assessing a multi-material recycling hub in East India. ## D. Future Capacity Targets * **Material-Specific Scaling:** Lead recycling to account for the largest share of future capacity, with targeted additions in aluminium, rubber, plastics, and emerging lithium-ion streams. * **Capacity Ceiling Excludes New Segments:** The **700,000 tpa FY28 target excludes paper and steel**; any growth in these areas will be incremental to the current plan. --- # 4. Segment & Vertical Growth ## A. Key Figures * **Rubber Business Revenue (FY '27):** **₹70–80 Cr** (target) * **Non-Lead Revenue Target:** **30%** of total revenue * **ADC Demand:** **65–70%** linked to auto industry ## B. Rubber Recycling * **Strategic Ramp-Up:** Rubber segment set for commercial scale with **Mundra project commissioning in Q4 FY'26** and Romania facility stabilization enabling FY'27 revenue contribution. * **Market Share Resilience:** Despite lower reported top-line growth versus peers, management asserts **no loss of market share** due to distinct customer bases and vast global market opportunity. * **Selective Expansion:** Company evaluates adjacent recycling segments like copper but remains focused due to **low value-add and structural scrap supply constraints** in India. ## C. Lithium-Ion Plans * **Pilot Launch Imminent:** Lithium and battery recycling pilot unit at Mundra on track for **Q3 FY26 commissioning**, marking first step toward new technology vertical. ## D. Non-Lead Revenue Target * **Sustainability & Diversification Goals:** Non-lead segment targeted at **30% of revenue**, supported by **13 eco-friendly facilities** and operations across **70+ countries**, alongside renewable energy and efficiency targets. --- # 5. Supply Chain & Sourcing ## A. Key Figures * **Battery Sourcing Mix (India):** **52%** domestic · **48%** imported (current) | **36%** domestic · **64%** imported (prior year) ## B. Domestic vs Imported Scrap * **Strategic Shift to Domestic:** Notable increase in domestic battery scrap sourcing in India, reflecting improved local availability and reduced import dependency. * **Global Procurement Edge:** Copper scrap remains largely imported from organized markets (U.S., Europe), where access is broad and competitive advantages are limited. ## C. Overseas Scrap Yards * **Integrated Global Network:** Around **50%** of total scrap processed in India is sourced overseas, underpinned by company-owned international yards that ensure supply security. * **Margin Advantage in Rubber Recycling:** Competitive edge driven by **lower-cost tire and rubber scrap** procurement via overseas yards, contributing to **higher margins**. * **Expansion Supported by Dual Sourcing:** Future growth to be fueled by both Indian and international scrap, with ongoing strengthening of overseas operations. --- # 6. Regulatory & Market Risks ## A. Regulatory Catalysts & Delays * **MCX Approval Pending:** Aluminium trading and hedging mechanisms on MCX remain unlaunched despite all necessary approvals being in place; implementation expected imminently but no firm timeline. * **Strategic Contingency:** Domestic aluminium expansion and acquisition plans are contingent on MCX hedging approval; otherwise, growth will shift overseas in aluminium and plastics. * **Readiness Confirmed:** Internal and regulatory approvals for ADC Alloy 12 are fully secured, with no outstanding requirements for three months. ## B. OEM Certification Status * **Partial OEM Access:** Recycled aluminium quality approvals are largely secured, but key OEMs like Maruti remain unapproved; sales can still occur via Tier 1/2 suppliers at reduced margins. * **Exchange as Alternative Channel:** Once MCX is operational, the company can bypass OEM dependency by selling ADC12 directly on exchange, contingent on market demand. ## C. BWMR & EPR-Driven Shifts * **Scrap Formalization Accelerating:** Tighter enforcement of Battery Waste Management Rules (BWMR) and EPR over the past 3–4 months has improved traceability and reduced leakages, boosting organized sector scrap inflows. * **Battery Scrap Uptake Rising:** Organized sector capture of battery scrap expected to surge from **35% to ~90%** in 2–3 years due to regulatory tightening. * **Rubber Recycling Transition:** Highly fragmented rubber recycling sector (90% unorganized) is shifting toward formalization driven by new EPR mandates and CPCB norms for pyrolysis plants. --- # 7. Guidance & Outlook ## A. Key Figures * **Revenue Growth Target:** **30–35%** over 3–4 years (pre-paper/steel) * **Capacity Addition:** **4.6 Lakh Tons** in FY26 (unchanged) * **Capex Allocation:** **₹850 Cr** to core verticals · **₹40 Cr** for lithium-ion · **₹60–70 Cr** for non-lead (tire) ## B. Revenue Growth Forecast * **Long-Term Vision:** Advancing **Vision 2029** with targeted **>25% volume CAGR** and **>35% profitability growth**, underpinned by disciplined expansion into lithium-ion, rubber, steel, and paper recycling. * **Phased Diversification:** New verticals in **paper and steel** to be pursued **sequentially**, not concurrently, with no near-term capex commitment, allowing focus on integration and returns. ## C. Capex Allocation * **Strategic Shift to Brownfield:** Capex efficiency improved via shift from Greenfield to Brownfield expansions at **Mundra and Phagi**, enabling same capacity additions at significantly lower capital intensity. * **Near-Term Focus:** Current investments concentrated on scaling **existing verticals**, **rubber**, and **lithium-ion**, with **no allocation for paper/steel before H2 next fiscal**. * **Reinvestment Discipline:** Total two-year capex reduced to **₹1,200 Cr** from **₹1,500 Cr**, reflecting capital discipline while maintaining growth trajectory. ## D. Margin Expectations * **Margin Resilience:** EBIT per kg expected to remain **above ₹19–₹20/kg** supported by ongoing **overseas scrap arbitrage**, with downside risk only if imports halt completely. * **Commodity Flexibility:** Openness to re-evaluate **copper exposure** based on market dynamics, ensuring strategic alignment with profitability across recycling segments.