A Potential Multibagger - Battery Recycling Business

Updated: Jul 7, 2021

Rechargeable lithium batteries are very promising candidates for next-generation power sources because of their high gravimetric and volumetric energies with respect to other cell chemistries.

  • Demand for recycling lithium batteries is expected to become viable in six to seven years,

  • Gravita India Ltd., India’s largest battery recycling company, is entering the electric vehicle battery recycling business, according to the CEO of Gravita India, Yogesh Malhotra

  • According to the International Energy Agency, 100-120 GWh of electric vehicle batteries will be retired by 2030, a volume roughly equivalent to current annual battery production. Without effective measures to address such volumes, this can become a significant environmental liability, it said. Spent batteries can be channeled to second-use or recycling with the aid of policies that help to steer these markets towards sustainable end-of-life practices, the IEA said.

  • Gravita India is setting up a recycling plant in Mundra in Gujarat, which will become operational by August 2021. Smelting and refinery facilities for battery recycling will be available at this plant.

  • “We already have recycling facilities in Jaipur, Jammu, Gandhidham, and Chittoor in Andhra Pradesh. After the establishment of this plant, imported raw material will be recycled in Mundra and will be exported back from there,” Malhotra said. “Scrap from Africa, which was earlier imported to India, will now be consumed by our four African recycling facilities in Ghana, Tanzania, Senegal, and Mozambique, resulting in further savings in logistic costs and reduction of the working capital cycle.”

  • On the company’s borrowings, Malhotra said that Rs 17 crore had been paid last year and debt will be further decreased over the next few years. Part of the company’s short-term working capital loan of Rs 200 crore is hedged against client orders.

  • “We are not worried about this loan amount. As I said before, as we will get more raw material in India, this loan requirement will automatically come down,” Malhotra said.

  • The company’s long-term debt is Rs 57 crore, which is at a comfortable level as profit after tax has been increasing at 35 percent per year.

Financial Highlights

  • Market Capitalization: INR 869 crores (Micro Cap Company)

  • EPS: INR 7.6

  • Company P/E: 16.56

  • Industry P/E: 15.38

  • Net Sales Growth: 8.5%

  • EPS Growth: 113.27%

  • EBIDTA : 51%

  • Book Value: INR 39

Chart Analysis

GRAVITA 05-July-21

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