Gravita India Q1 FY27 Earnings Call: Guides 25-30% PAT CAGR, Copper Capacity Doubling

Gravita India Ltd held its Q1 FY27 earnings call on July 27, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Headline Financials & Credit Upgrade

• Revenue of Rs.1,475 Cr — grew 42% YoY in Q1 FY 2026-2027, driven by copper diversification which offset a lead volume decline from supply-chain disruptions.
• Adjusted EBITDA of Rs.145 Cr — up 29% YoY in Q1 FY 2026-2027; margin compression reflected higher LME copper prices (avg $13,500/ton vs $9,000/ton last year) with the company 100% hedged, so commodity upside does not flow through.
• PAT of Rs.106.39 Cr — increased 14% YoY in Q1 FY 2026-2027; PAT CAGR of ~24% over the past three years (period unspecified).
• ICRA upgraded long-term rating to AA — the rating agency raised Gravita's long-term credit rating from AA- to AA, citing the company's strengthening financial profile.
• Net debt of ~Rs.150 Cr — reported by CFO Sunil Kansal as of Q1 FY 2026-2027, with a working capital cycle of ~95 days (higher due to copper inventory and material in transit).

Divisional EBITDA & Value-Added Product Mix

• Lead EBITDA of Rs.24,181/ton — in Q1 FY 2026-2027, volumes declined YoY as the Middle East war disrupted 15-20% of scrap imports; management expects similar EBITDA margins in coming quarters despite top-line pressure.
• Copper EBITDA of Rs.55,151/ton — Q1 FY 2026-2027, with 100% value-added product (VAP) contribution and capacity utilization at 50%; margin was 5.2% vs ~8% in Q1 FY 2025-2026 due to higher LME prices and the hedged position.
• Aluminum EBITDA of Rs.25,175/ton (overseas) — Q1 FY 2026-2027; Indian aluminum operations delivered Rs.13-14/kg. Management guided sustainable levels at Rs.15-17/kg overseas and Rs.13-14/kg India, excluding temporary price disruption gains.
• Plastic EBITDA of Rs.10,197/ton — Q1 FY 2026-2027; management guided sustainable EBITDA at Rs.10-12/kg as a steady-state level.
• Total VAP contribution reached 63% — in Q1 FY 2026-2027, driven by the 100% VAP copper division and a greater focus on value-added products in lead. Excluding copper, VAP rose from 40-42% to 50%.

Capacity Build-Out & Capital Allocation

• Total capacity of 4.97 lakh MT/year — as of Q1 FY 2026-2027, with a target to exceed 8 lakh MT/year by FY 2028-2029; overall group utilization was 50-52% in the quarter.
• Copper capacity to double from 31,000 to 60,000 MTPA — management plans to double copper capacity over the next 3 years (by ~FY 2029-2030); a new 29,400 MT/year Gujarat plant is expected in ~12 months at ~Rs.160 Cr investment.
• Lead expansion of 40,500 MT/year at Phagi, Jaipur — completed at Rs.30 Cr (funded by internal accruals), bringing the plant to 75,819 MT/year. An additional 45,000 tonnes is installed pending government permissions, with ramp-up expected by end of FY 2026-2027.
• Rs.1,680 Cr capex allocated through FY 2028-2029 — with Rs.850 Cr for existing businesses and the remainder for lithium-ion, copper, and steel recycling. Rubber expansion has been put on hold; copper is being fast-tracked.
• Mundra plant utilization at 50% — including the 80,300 tonnes lead expansion added in February FY 2025-2026, utilization was constrained by scrap sourcing disruptions in Q1 FY 2026-2027.

Margin Trajectory & ROCE Outlook

• Copper EBITDA/ton of ~Rs.55,000 near-term — management guides this level for the near term, rising to Rs.65,000-70,000 over the next 2-2.5 years as capacity utilization improves and backward integration progresses. Copper margins of ~4.2% (of RMI segment) are expected to remain for FY 2026-2027, then improve to ~Rs.75,000/ton within 2-2.5 years (by ~FY 2028-2029).
• Company-level ROCE at 20% — in Q1 FY 2026-2027 (including copper); management expects improvement to 25%+ over the next three years, with the copper business targeting 25% ROCE in the same timeframe.
• Copper profitability targeting ~Rs.60/kg by end of FY 2026-2027 — and Rs.70-75/kg over two to three years (by FY 2028-2029) through capacity utilisation, debottlenecking, procurement optimisation, and backward integration.
• Sustainable EBITDA/kg guided for plastic and aluminum — Rs.10-12/kg for plastic and Rs.15-17/kg for aluminum (overseas), with Indian aluminum at Rs.13-14/kg, all excluding temporary gains from price disruptions in Q1 FY 2026-2027.
• Other income of Rs.47 Cr in Q1 FY 2026-2027 — comprising Rs.35 Cr operational (forex-related) and Rs.13 Cr non-operational; the operational portion offsets hedging gains/losses in other expenses, making overall profitability neutral.

Scrap Disruptions & Procurement Strategy

• Middle East war disrupted 15-20% of scrap imports — in Q1 FY 2026-2027, the Gulf region (previously 15-20% of total scrap) delivered almost nothing. CEO Yogesh Malhotra stated Q2 FY 2026-2027 may also see impact, but the company is using the scrap shortage to increase profit margins.
• Scrap yards expanded from 33 to 39+ — over the past three quarters (as of Q1 FY 2026-2027), mostly in developing nations. Management is now setting up own yards in developed nations (US by end of FY 2026-2027) to source more copper scrap and reduce reliance on agent-based arbitrage buying.
• Domestic sourcing at 35% for India plants — in Q1 FY 2026-2027; the new US yards are expected to reduce procurement costs even initially and will also improve lead procurement efficiency.
• Inventory of Rs.1,040 Cr as of 30 Jun 2026 — roughly flat versus March 2026 levels, reflecting the build-up of copper inventory and material in transit that drove the working capital cycle to ~95 days.
• Management expects scrap sourcing to improve by end of FY 2026-2027 — through new yards and geography diversification, but acknowledges the 20% supply loss from the Gulf cannot be quickly replaced.

Guidance, Outlook & Key Risks

• PAT CAGR target of 25-30% for FY 2026-2027 and next four-five years — management expressed confidence in achieving "25-30% PAT CAGR in FY 2026-2027 and for the next four‑five years", building on a ~24% CAGR over the past three years.
• Copper utilization expected to reach 60%+ by Q4 FY 2026-2027 — from 50% in Q1, via de-bottlenecking and product mix changes; major ramp-up is expected thereafter.
• Additional lead capacity of 45,000 tonnes (pending government permissions) — expected to achieve 70% utilization at optimal level, contributing ~Rs.50 Cr/month additional revenue, with ramp-up by end of FY 2026-2027 subject to scrap availability normalization.
• Aluminum ADC 12 alloy inclusion on MCX remains pending — management met MCX last month and expects a decision within FY 2026-2027; all other formalities are complete.
• New LME ingot listing for OEM approvals, not direct sales — management stated the LME brand registration ("Gravita M") is a tool to facilitate new OEM approvals and improve product liquidity, with no customer pushback or demand slowdown behind the listing.
• Risks: Middle East war continues to pressure lead volumes in Q2 FY 2026-2027; the 20% supply loss from the Gulf region cannot be quickly replaced; copper margin dilution from higher LME prices persists as the company remains 100% hedged.