Release Date: July 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue for Q1 FY25 increased by 29% to INR908 crores.
- Adjusted EBITDA for Q1 FY25 increased to INR91.24 crore, up by 33% year-on-year.
- PAT showed a significant increase of 29% to INR67.33 crores year-on-year in Q1 FY25.
- Gravita India Ltd (BOM:533282, Financial) is setting up a pilot project for lithium-ion recycling and its first Indian tire recycling plant at Mundra, expected to be operational in H1 FY26.
- The company is advancing strategically to meet its short-term, mid-term, and long-term goals by FY27, FY34, and FY50, respectively, as outlined in its ESG roadmap.
Negative Points
- Employee costs saw a material increase of close to 60% quarter-on-quarter due to additional incentives and annual increments.
- Other income reduced materially on a quarter-on-quarter and year-on-year basis.
- Closure of subsidiaries in Costa Rica and Jamaica, although non-operational, indicates a strategic exit from certain geographies.
- The hedging mechanism for aluminum is not yet in place, leading to potential volatility in margins.
- The company faces challenges in achieving more than 70-80% capacity utilization due to the non-linear flow of scrap material.
Q & A Highlights
Highlights from Gravita India Ltd (BOM:533282) Q1 FY25 Earnings Call
Q: What was the key driver behind the improvement in EBITDA per tonne for aluminum?
A: Sunil Kansal, CFO: The improvement in EBITDA per tonne for aluminum was partly due to higher metal prices this quarter. Additionally, we are working on a hedging mechanism for aluminum, similar to lead, which will stabilize margins in the future.
Q: Can you clarify the reasons behind closing subsidiaries in Jamaica and Costa Rica?
A: Sunil Kansal, CFO: These subsidiaries were part of our PET recycling business, which we exited due to scrap shortages during COVID. We are now planning to set up a PET recycling facility in India.
Q: What are the expected margins for the new lithium-ion battery recycling business?
A: Yogesh Malhotra, CEO: The lithium-ion battery recycling business is expected to be profitable from day one. We are setting up a pilot project to understand the technology and material flow better.
Q: What is the expected timeline for the aluminum hedging instrument to be available?
A: Yogesh Malhotra, CEO: We expect the aluminum hedging instrument to be available in Q2 FY25.
Q: What are the volume growth expectations for FY25?
A: Yogesh Malhotra, CEO: We are targeting a volume growth of 25% on a two-year basis, with this year expected to be better than FY24.
Q: What is the sustainable EBITDA per tonne for aluminum and lead?
A: Sunil Kansal, CFO: The sustainable EBITDA per tonne for aluminum is around INR 14,000 to INR 16,000, while for lead, it has improved to INR 18,000 to INR 19,000.
Q: What is the expected CapEx for FY25?
A: Sunil Kansal, CFO: The estimated CapEx for FY25 is approximately INR 180 crores, with INR 140 crores for existing verticals and INR 40 crores for new verticals.
Q: What is the current net debt level and working capital days?
A: Sunil Kansal, CFO: The net debt level is around INR 470 crores, and working capital days have come down to around 80 days from 85 days in the previous quarter.
Q: What is the expected tax rate for the year?
A: Yogesh Malhotra, CEO: The expected tax rate for the year is around 10% to 11%, considering certain exemptions in India and overseas.
Q: What is the progress on the rubber recycling plant?
A: Yogesh Malhotra, CEO: The rubber recycling plant in India is expected to be operational by FY26, with an initial capacity of 9,000 tonnes and a CapEx of approximately INR 30 crores.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
