Gravita's margin improved year on year, but lower other income cut profit
Sequential margin pressure and a 75.22% drop in other income outweighed better operating profit, sending the stock down 6.16% in five sessions.
Filed 07 May 2026, 19:20 IST · after market close · Gravita India Ltd (GRAVITA)
Key takeaways
- Consolidated operating margin rose 0.70 percentage points year on year to 9.59%, as expenses grew 12.21% against 13.08% revenue growth.
- Net profit fell 3.28% year on year because other income dropped 75.22%, despite lower interest costs and a 3.80-percentage-point decline in the tax rate.
- The stock fell 6.16% five sessions after the results, compared with a 5.06% median absolute move after its previous eight results.
Price around the results
Operating improvement did not translate into higher profit
Gravita reported consolidated revenue growth of 13.08% year on year and operating profit growth of 22.04%. Net profit still declined 3.28% because other income fell 75.22% and accounted for 8.36% of pre-tax profit in the current quarter. A lower tax rate of 13.35%, down 3.80 percentage points year on year, partly cushioned the decline.
Sequential margin reversal followed faster cost growth
Quarter on quarter, revenue increased 15.31%, but expenses rose faster at 18.16%, narrowing operating margin by 2.19 percentage points. Lower interest expense, down 33.18%, and a 1.94-percentage-point reduction in the tax rate were not enough to prevent net profit from falling 5.83%. Operating margin has now declined from 11.78% in Q3FY26 to 9.59% in Q4FY26 after improving through the first three quarters of FY26.
Margin remains below the reported commodities peer median
Gravita's 9.59% operating margin was 9.18 percentage points below the 18.77% median for the 51 commodities peers that had reported the quarter. It ranked seventh from the bottom on this measure, making the margin gap a material part of the quarter's read-through.
Management outlined capacity and mix priorities
Management said the company incurred approximately Rs 372 crore of capex in FY26, commissioned a 6,000 MTPA lithium-ion battery recycling plant at Mundra and expanded Mundra lead recycling capacity to 145,100 MTPA. The presentation said Gravita targets more than 8 lakh LTPA of capacity by FY29, alongside a 45–50% contribution from value-added products and 35–40% from non-lead businesses. Management also said it is expanding into copper, rubber and steel, and targets 20–25% volume CAGR and 30–35% profitability growth.
The post-result decline was initially below the stock's usual move
The stock fell 2.00% on the first session after the results, with a 4.11% opening gap lower, and the decline reached 6.16% by day five. The initial fall was smaller than the 5.06% median absolute move after the previous eight results, when the stock rose three times and fell five times; the five-day decline was larger than that typical move.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹1,173 cr | ₹1,017 cr | +15.31% | +13.08% |
| Other income | ₹9 cr | ₹12 cr | -24.21% | -75.22% |
| Expenses | ₹1,060 cr | ₹897 cr | +18.16% | +12.21% |
| Operating profit | ₹113 cr | ₹120 cr | -6.07% | +22.04% |
| Operating margin (%) | 9.59% | 11.78% | — | — |
| Interest | ₹4 cr | ₹7 cr | -33.18% | -22.24% |
| Depreciation | ₹11 cr | ₹10 cr | +12.30% | +42.58% |
| Profit before tax | ₹106 cr | ₹115 cr | -7.94% | -7.52% |
| Tax | ₹14 cr | ₹18 cr | -19.66% | -28.04% |
| Net profit | ₹92 cr | ₹97 cr | -5.83% | -3.28% |
| EPS (₹) | ₹12.62 | ₹13.41 | -5.89% | -3.22% |
Operating margin of 9.59% compares with a Commodities sector median of 18.77% across 51 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -2.00% | -1.38% |
| Next session | -1.22% | — |
| 5 sessions | -6.16% | -3.35% |
| 15 sessions | -9.62% | — |
| 30 sessions | -3.27% | — |
Volume on the results session was 2.31× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
Guidance & outlook
- The company targets 20–25% volume CAGR.
- The company targets sustaining high ROIC of approximately 25%.
- The company targets 30–35% profitability growth.
- The company targets value-added products contributing approximately 45–50%.
- The company targets non-lead businesses contributing approximately 35–40%.
Expansion
- The company targets capacity of more than 8 lakh LTPA by FY29.
- The company incurred approximately Rs. 372 crore of capex during FY26.
- Gravita commissioned a 6,000 MTPA lithium-ion battery recycling plant at Mundra.
- Gravita expanded Mundra lead recycling capacity by 80,300 MTPA to 145,100 MTPA.
New initiatives
- Gravita is expanding into copper, rubber and steel as new verticals.
What to watch
- Whether operating margin recovers from 9.59% after the 2.19-percentage-point sequential decline.
- Whether other income remains near its 8.36% share of pre-tax profit or continues to affect earnings quality.
- Progress toward the company's stated targets of more than 8 lakh LTPA capacity by FY29 and 45–50% value-added product contribution.