Gravita India Ltd, a leading recycling player, reported strong financial results for the second quarter ending September 30, 2024. The company's net profit increased by 26.3% year-on-year (YoY), reaching ₹72 crore, up from ₹57 crore in the same quarter last year. Despite positive profit growth, the company's shares closed lower on the BSE.

Key Highlights of Q2 FY2024 Financial Performance:

• Net Profit: ₹72 crore, up 26.3% YoY from ₹57 crore in Q2 FY2023.
• Revenue from Operations: ₹927.4 crore, reflecting an 11% growth compared to ₹836.2 crore in the same period last year.
• EBITDA: ₹63.4 crore, down 13% from ₹72.8 crore in Q2 FY2023.
• EBITDA Margin: 6.8% compared to 8.7% in the corresponding quarter of the previous fiscal year.

Revenue Growth Amid Margin Pressure

Gravita India’s 11% increase in revenue to ₹927.4 crore signals sustained demand for its recycling operations. However, the company faced pressure at the operational level, as its EBITDA dipped by 13% to ₹63.4 crore, leading to a decline in its EBITDA margin, which stood at 6.8% compared to 8.7% in Q2 FY2023.

Strategic Expansion into Europe

In addition to its financial results, Gravita India highlighted a significant step in its expansion strategy. The company announced last month that its step-down subsidiary, Gravita Netherlands BV, had signed a Memorandum of Understanding (MoU) to acquire a waste tyre recycling plant in Romania. This facility, with a capacity of approximately 17,000 metric tonnes per annum (MTPA), marks Gravita’s first recycling venture in Europe.

The acquisition will be conducted through a special purpose vehicle (SPV) in Romania, where Gravita Netherlands BV will hold an 80% stake, with the remaining 20% held by Romanian partners. The total investment for the acquisition is estimated to be around ₹40 crore, with Gravita investing ₹32 crore towards its contribution.

European Expansion Strategy

The acquisition is part of Gravita India’s broader European expansion strategy, aimed at growing its presence in new markets and forming strategic partnerships. Gravita plans to enhance its recycling operations across Europe, increasing its customer base and competitive edge in the region.

Stock Performance

Despite the positive quarterly results, shares of Gravita India ended lower on Monday, closing at ₹2,427.00, down by ₹87.45 or 3.48% on the Bombay Stock Exchange (BSE).

Conclusion

Gravita India’s Q2 FY2024 results showcase a healthy profit growth trajectory with increased revenue, although operational margins remain under pressure. The company’s strategic move into the European market, starting with the Romanian acquisition, is expected to bolster its global presence and drive long-term growth.