Gravita India Ltd. Surged 2%; Volume Increased Too!

The Friday session is unfolding as a truly remarkable one for the domestic benchmark indices, as both the Nifty and Sensex experience an impressive surge of nearly 1%. What makes this even more intriguing is the simultaneous drop of nearly 5% in the India VIX, also known as the fear index. This decline signifies a decrease in fear among market participants, thereby fueling buying activity in the broader markets. Amidst this excitement, one smallcap stock has managed to capture the attention of investors: Gravita India Ltd.  

The stock of Gravita India Ltd witnessed a 2% surge on Friday, accompanied by a higher high and higher low candle compared to its previous trading session. What’s more, the total traded volume for the day has surpassed the volume of the previous trading session, indicating an active and enthusiastic participation of market participants in the stock.  

Now, what could be the driving force behind this remarkable surge in the stock price?

The company has recently announced a significant development in a press release. They have successfully expanded the capacity of their existing recycling unit located in Chittoor, Andhra Pradesh. Specifically, the capacity for Battery recycling in this unit has been increased by an impressive 26,440 metric tonnes per annum (MTPA), bringing the total capacity of Battery recycling to a substantial 64,640 MTPA. 

This expansion is a significant step for Gravita India Ltd, as it aligns with the company’s ambitious target of reaching a total capacity of 4,25,000 MTPA by FY2026. With this expansion, the Gravita Group’s overall capacity has now reached an impressive 2,78,059 MTPA.  

As an effect of Battery Waste Management Rules, 2022 which got notified in August 2022, there will be Extended Producer Responsibility “EPR” on the producer, manufacturer and importers of new batteries to provide their used batteries to recyclers for fulfilling their EPR targets and with this expansion company is poised to take the volumes available for recycling on account of EPR obligations and there will be a large shift from informal recycling sector to formal recycling sector.  

In addition to the above, this plant has capitalized on the opportunity of domestic scrap available with the large telecom players, UPS OEMs, IT & ITES, Waste scrap from the Automobile segment etc. in respective markets. The company has contracts to collect their PAN India scrap in a cost-effective manner and by catering for the OEM customers in South India and exporting the finished goods using the nearest Chennai Port thus optimizing the overall logistic cost. This enhanced capacity will help the company to further strengthen its presence in the South Indian market including South East Asian Market.  

The investment in the said capacity expansion is approximately Rs 21 crore which has been funded through internal accruals of the company.  

Ace investor Ashish Kacholia holds about a 2.15% stake in the company as of the quarter that ended on March 31, 2023.