This smallcap stock has surged 100% from June low; zoomed 3694% in 4 years

Shares of Gravita India hit a new high of Rs 1,838.40, as they surged 14 per cent in Tuesday's intra-day trade backed by heavy volumes on the BSE.

Shares of Gravita India hit a new high of Rs 1,838.40, as they surged 14 per cent on the BSE in Tuesday’s intra-day trade on heavy volumes. The stock of the industrial minerals company surpassed its previous high of Rs 1,765.95 touched on July 25.

Since July 20, in 11 trading days, the stock has soared 41 per cent after Gravita witnessed remarkable growth in volumes, revenues, EBITDA, and profit after tax by 29 per cent, 29 per cent, 33 per cent, and 29 per cent respectively for the June 2024 quarter (Q1FY25). Proportion of value-added products and availability of domestic scrap continues to increase. Gravita is well-positioned for growth with its ambitious expansion plans, strong balance sheet and stringent Government Regulations.

The stock price of this smallcap company has doubled from its June low of Rs 917.35. In the past four years, it has skyrocketed 3,694 per cent from a level of Rs 48.45 on August 6, 2020.

At 02:20 pm; Gravita was trading 7 per cent higher at Rs 1,734.60, as compared to 0.18 per cent decline in the BSE Sensex. The counter saw huge trading volumes, with a combined 1.6 million shares changing hands on the NSE and BSE.

Gravita India is engaged in manufacturing and recycling of lead, aluminium and plastic products.

The management has set an ambitious growth plan called Vision 2028, to diversify into lithium-ion, steel and paper recycling; achieving revenue a compound annual growth rate (CAGR) and profit growth of 25 per cent+ and 35 per cent+ along with increasing the contribution of value-added products and non-lead business to 50 per cent+ and 30 per cent+.

The increasing demand for batteries from electric vehicles and energy storage systems is anticipated to augment market growth. Lead is the only metal that can be recycled several times without having any diminishing impact on its quality. As a result, the production of secondary (recycled) lead is increasing over primary, which is anticipated to have a positive impact on the market growth, the company said.

Gravita India highlighted progress on the regulatory framework (penalties for non-compliance of BWMR (Battery Waste Management Rules) and EPR (Extended Producer Responsibility) norms expected soon), with gradual stabilization of AL margins towards spurring volume growth.

The management has slightly upped its lead EBITDA/kg guidance to Rs 18-19 from Rs 17-18, on efficiencies and scale-related benefits. Efforts are under way in new verticals with due diligence in paper and steel, and pilot in Li-ion, said analysts at Emkay Global Financial Services in Q1FY25 result update. The stock however is trading above brokerage firm’s target price of Rs 1,650 per share.