Gravita India Q2 FY27 Earnings Call: Rs. 1,680 Crore Capex Through FY29, Guides 18-20% Lead Volume CAGR

Gravita India Ltd held its Q2 FY27 earnings call on October 27, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Solid Headline Growth, But PAT Lags and Standalone Profit Halves

• Q2 FY 2026-2027 revenue +28% YoY to Rs.1,427 crores — adjusted EBITDA +28% YoY to Rs.143.37 crores (margin over 10%); PAT +6% YoY to Rs.102 crores (margin over 7%).
• H1 FY 2026-2027: revenue +40%, EBITDA +29%, PAT +10% YoY — supported by improved product mix, operational efficiencies, and contribution from diversified recycling businesses.
• Value-added products contributed 64% of sales in H1 FY 2026-2027 — progress toward the Vision 2030 target of ~60%+ of revenue from value-added offerings.
• Q2 FY 2026-2027 EBITDA per tonne — lead Rs.22,620, aluminum Rs.22,664, plastics Rs.10,334, copper Rs.84,671.
• Standalone profit fell ~50% while consolidated profit rose 6% — flagged by analyst Shreya Masalia (Ashika); management indicated consolidated growth is coming partially from the RMAR business, the copper business, and overseas subsidiaries.
• Other income of Rs.18 crore in Q2 FY 2026-2027 — per IR head Anant Jain, comprising Rs.9.39 crore operational and Rs.8.61 crore non-operational income.

Lead Volumes Down 11% on Scrap Disruption; Recovery Expected from Q3

• Q2 FY 2026-2027 lead volumes fell 11% YoY and QoQ — the lowest in several quarters (figure cited by the Goldman Sachs analyst); CEO Yogesh Malhotra attributed this to raw material (scrap) availability rather than demand — "demand is not an issue."
• Gulf region still not yielding much scrap — management attributed pressure on domestic scrap over Q1–Q2 FY 2026-2027 to restricted scrap imports, which it linked to the Gulf War; the company expanded into new, costlier geographies with material expected to begin arriving in Q3 FY 2026-2027.
• Management characterized the dip as likely a one-off ("worst is over") — the lead working capital cycle of 80-90 days means newly booked material takes time to reach factories in India; improvement expected from Q3 FY 2026-2027 onwards, though no quantified H2 FY27 volume growth target was provided.
• Q2 FY 2026-2027 scrap mix: ~26% Indian battery scrap, 74% imported — per CEO Yogesh Malhotra; going forward (period unspecified), management expects 40-50% domestic and 50-60% overseas sourcing for India.
• Own scrapyards deliver ~2-3% additional margin vs aggregators — even after yard operating costs (period unspecified); the CEO framed sourcing as a "reverse FMCG" model underpinning EBITDA above competition for both lead and copper.
• Lead sales mix stays dynamic — management does not target a fixed domestic-vs-export split and sells wherever realization/margins are better.

Copper Margins Spike on Mix; Sustainable Level Guided Lower

• Copper EBITDA margin jumped from Rs.55/kg in Q1 FY 2026-2027 to Rs.85/kg in Q2 — attributed to newly commenced use of imported scrap raw material and one-off higher-margin/value-added orders; management explicitly denied any catch-up of prior-quarter inventory losses.
• Sustainable copper EBITDA margin guided at Rs.65-70/kg over the short term — excluding the specific high-margin sales orders received in Q2 FY 2026-2027; underpinned by higher efficiencies, rising capacity utilization, and improved raw material availability absent in Q1 FY 2026-2027.
• Long-term copper margin expectation of ~Rs.90/kg — once Gravita's own recycling subsidiary is set up and fully operational within the next three years (by FY 2029-2030).
• Copper segment operated at 50% capacity utilization in H1 FY 2026-2027 — with sales up 12% following entry via RMIL, which contributed Rs.420 crores to Q2 FY 2026-2027 consolidated revenue at an 8.5% EBITDA margin.
• RMAL utilization stagnant sequentially due to process bottlenecks — debottlenecking capex underway with machines already ordered; utilization expected to improve to around 65-70% over the next 2-3 quarters (from the Q2 FY 2026-2027 call); lifting beyond ~70% requires capacity capex, which management said will probably take around 3 years.
• Copper and lead positions fully hedged; aluminum not hedged — per CFO Sunil Kansal, because aluminum is not traded; increased US scrap imports have impacted the copper working capital cycle.

Rs.1,680 Crore Program Through FY29; US Sourcing Arm Incorporated

• Total capex earmarked at Rs.1,680 crores through FY29 — Rs.815 crores for strengthening/expanding existing businesses, balance for new recycling verticals including lithium-ion battery and copper; ~Rs.600 crore spent till now (as of the Q2 FY 2026-2027 call) against a Rs.680 crore plan (period unspecified), versus the Rs.585 crore H1 FY 2026-2027 spend cited by the analyst.
• Capacity being scaled from ~480,000 tons to 800,000 tons — through the capex program under the 2030 plan.
• Mundra to add 59,200 MTPA copper recycling capacity at ~Rs.64 crores — funded from internal accruals, expected to be commissioned in phases by March 2029; Mandvi's 29,400 MTPA facility (~Rs.160 crores, internal accruals) on track for commissioning within the next 12 months (i.e., FY 2027-2028).
• Board approved ~Rs.94.42 crores for RMIL's rights issue — against a total rights issue of ~Rs.94.81 crores; RMIL received an ICRA AA (stable) rating for long-term facilities and ICRA A1+ for short-term facilities.
• Gravita Recyclers USA Inc. incorporated with initial capital of US$50,000 — a wholly owned sourcing arm shipping US copper and battery scrap to Indian plants, generating no direct revenue but reducing scrap collection cost; commencement expected in Q3 FY 2026-2027, own US yards targeted to be fully operational over the next 1-2 years (FY 2027-2028 to FY 2028-2029), with lease-model yards keeping US capex "not substantial".
• No capex delay planned — management will keep buying African scrap and adding capacity so long as battery scrap is available and ROCE-accretive; it sees sufficient scrap availability, both domestic India and overseas, for the next 3-4 years (through FY 2029-2030–FY 2030-2031).

RCM Seen Accelerating Formalization; EPR Credit Surge Expected in FY29

• The 57th GST Council recommended bringing electrical and electronic waste scrap under the reverse charge mechanism — for procurement from unregistered suppliers; management expects this to exponentially enhance domestic procurements.
• RCM to eliminate the unorganized sector's 18% additional margin under GST regulation — management now expects the unorganized-to-organized shift to begin in FY 2026-2027 itself, faster than the ~3-5 years conversion timeline it had previously indicated (i.e., by ~FY 2029-2030–FY 2031-2032); RCM for battery scrap has come through although not yet notified, with green shoots already visible from scrap suppliers on the ground.
• EPR credit demand surge confirmed once the 7-year BWMR compliance window closes in FY29 — as some producers are currently deferring purchases in anticipation of lower prices; EPR credit prices currently band around Rs.5.40–Rs.18/kg (as of Q2 FY 2026-2027), with the market to decide final levels.
• CPCB is planning to host EPR credits on an electronic trading platform under MSTC guidance — its EPR portal will monitor purchases, GST and e-way bills alongside sales, with credit-generation audits to ensure only genuine EPR credits are created; rules are being framed and expected to be implemented soon.
• India has written to the EU seeking to be part of the scrap chain — negotiations ongoing between the Ministry of Commerce and the Ministry of Environment Forest with the EU over proposed EU waste-shipment restrictions; management noted European scrap yards also want material flows to continue and said the issue "will be sorted out."
• Regulatory backdrop cited as broadly positive — Europe bans scrap exports, China has stopped importing scrap, and India's government encourages scrap imports under its Make in India policy; CFO Sunil Kansal noted the government removed the earlier import duty on copper scrap — "regulatory is all positive for this business." If India were to ban scrap imports — deemed very unlikely given government policy — overseas operations could be expanded to mitigate.

18-20% Lead Volume CAGR Guided; Lithium-Ion and Tire Plants Deferred

• Lead volume growth guided at 18-20% per annum (volume terms) over the next three years — through FY 2029-2030, with overall growth of ~18% CAGR by the end of that period, despite weak volumes in Q1-Q2 FY 2026-2027; individual quarters may fall short of the 18% pace.
• India tire recycling plant on the back burner but "definitely going to be set up" within the next 3 years (by FY 2029-2030) — the government restricts import of scrap tires into India for TPO and the company does not buy local Indian scrap due to the prevailing GST issue, so the planned India plant was intended for other rubber uses (not TPO); TPO is already used internally across all African plants.
• Lithium-ion battery volumes expected within the next 4-5 years (by around FY 2031-2032) on a conservative outlook — based on average EV battery life of 6-7 years with some material expected earlier, though it could start earlier; the Vision 2030 target excludes any lithium-ion battery revenue — if it materializes, it would be only additional to the existing 2030 targets.
• Gasification plants planned — running on all kinds of coals and other materials, aimed at lowering fuel cost and reducing carbon emissions (no timeline disclosed); the company currently uses TPO and other sustainable fuels.
• Geopolitical and logistics disruptions impacted availability and movement of recyclable materials — management is diversifying sourcing geographies and expanding scrap procurement yards in developed economies, and remains optimistic on lithium-ion battery recycling, intending to scale toward higher value recovery as battery feedstock availability increases.