Gravita's margin slips sequentially despite 42% revenue growth
Operating costs grew faster than revenue quarter on quarter, while other income accounted for 36.21% of pre-tax profit.
Filed 27 Jul 2026, 15:53 IST · after market close · Gravita India Ltd (GRAVITA)
Key takeaways
- Consolidated operating margin rose 1.90 percentage points year on year to 11.01% as revenue grew 41.84% while expenses grew 38.88%.
- Net profit increased only 14.30% year on year because interest expense rose 89.75% and other income contributed 36.21% of pre-tax profit.
- Sequentially, operating margin fell 1.68 percentage points as expenses grew 28.19%, faster than revenue at 25.78%.
Price around the results
Revenue growth returned, but profit conversion remained limited
Gravita reported consolidated revenue growth of 41.84% year on year and 25.78% quarter on quarter, yet net profit rose only 14.30% year on year and 15.86% sequentially. The gap reflects a sharp increase in interest expense, up 89.75% year on year and 162.70% quarter on quarter, alongside higher depreciation. Other income rose 58.15% year on year and 436.57% quarter on quarter, contributing 36.21% of pre-tax profit and making earnings quality an important consideration.
Sequential cost pressure narrowed the operating margin
Expenses grew 28.19% sequentially against 25.78% revenue growth, reducing operating margin by 1.68 percentage points to 11.01%. Year on year, the picture was better: revenue grew 41.84% while expenses grew 38.88%, lifting the margin by 1.90 percentage points. The tax rate also rose 5.62 percentage points sequentially, partly offsetting the benefit from higher pre-tax profit.
Margin is below the March peak and sector median
The operating margin improved from -0.73% in Q3FY26 to 12.69% in Q4FY26 before easing to 11.01% in Q1FY27, so the sequential decline follows a sharp recovery rather than a fresh multi-quarter slide. Gravita's margin was 2.43 percentage points below the 13.44% median for 14 reported Commodities peers. The company ranked fifth from the bottom on this measure.
Capacity expansion and recycling initiatives remain the management focus
Management said the company spent approximately Rs 30 crore on capex during the quarter and expanded Phagi's lead recycling capacity by 40,500 MTPA to 75,819 MTPA. The company also said it commissioned a pilot lithium-ion battery recycling project and that the RMIL acquisition marked its entry into copper recycling. Under Vision 2030, management said it targets volume CAGR of approximately 20–25% and profitability growth of approximately 30–35%, with capacity planned at more than 800,000 MTPA by FY 2029.
No immediate market reaction; past responses have leaned negative
The results were filed after market close, so there was no immediate market reaction to assess. Across the stock's last eight result-day reactions, it rose three times and fell five times, with a median absolute move of 5.06%.
Q1FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹1,475 cr | ₹1,173 cr | +25.78% | +41.84% |
| Other income | ₹48 cr | ₹9 cr | +436.57% | +58.15% |
| Expenses | ₹1,313 cr | ₹1,024 cr | +28.19% | +38.88% |
| Operating profit | ₹162 cr | ₹149 cr | +9.19% | +71.39% |
| Operating margin (%) | 11.01% | 12.69% | — | — |
| Interest | ₹11 cr | ₹4 cr | +162.70% | +89.75% |
| Depreciation | ₹14 cr | ₹11 cr | +31.13% | +66.36% |
| Profit before tax | ₹131 cr | ₹106 cr | +23.91% | +13.24% |
| Tax | ₹25 cr | ₹14 cr | +76.17% | +8.92% |
| Net profit | ₹106 cr | ₹92 cr | +15.86% | +14.30% |
| EPS (₹) | ₹14.60 | ₹12.62 | +15.69% | +13.97% |
Operating margin of 11.01% compares with a Commodities sector median of 13.44% across 14 peers that have reported Q1FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- The Mundra plant received LME Brand Listing for its lead metal under the GRAVITA M brand.
- ICRA upgraded the company’s credit rating during the quarter.
Guidance & outlook
- Gravita targets volume CAGR of approximately 20–25% under Vision 2030.
- Gravita aims to sustain ROIC of approximately 25%.
- Gravita targets profitability growth of approximately 30–35%.
- Gravita targets renewable power usage of approximately 25–30%.
Expansion
- The company incurred approximately Rs. 30 crore of capex and expanded Phagi lead recycling capacity by 40,500 MTPA to 75,819 MTPA.
- The company plans capacity of more than 800,000 MTPA by FY 2029.
- The company has a capex plan through FY 2029.
New initiatives
- The company commissioned a pilot lithium-ion battery recycling project.
- The RMIL acquisition marks Gravita’s entry into copper recycling.
What to watch
- Whether operating margin recovers from 11.01% after the 1.68-percentage-point sequential decline.
- Whether interest expense moderates from its 162.70% quarter-on-quarter increase.
- Progress in using the expanded Phagi capacity of 75,819 MTPA and the pilot lithium-ion battery recycling project.