Lesser Known / Less Followed Companies in Indian Stock Markets - Gravita India Ltd

Hundreds of Indians companies are traded on Indian stock exchanges. The major Indian stock exchanges are National Stock Exchange (NSE), Bombay Stock Exchange (BSE – Oldest stock exchange in India). Apart from these there are several regional stock exchanges operating from other Indian cities and are lesser known and less followed. Out of the hundreds of companies a limited number of companies are only followed by investors likes those which are included the stock indicies and some of the popular ones. In this series of blogs will be talking about those companies which are consistent performers over the years but are less followed by the investors.

The first in this series is a company called Gravita India Ltd

What the Company does?

Gravita India Ltd is the flagship company of Gravita Group which has manufacturing facilities in Asia, Africa.

Gravita India Ltd is a small cap company engaged in manufacture of Pure Lead, Lead Alloys, Lead Chemicals like Oxides and specific Lead products like sheets, pipes etc. The company is a certified Star Export House by Ministry of Commerce and Industry, Government of India.

Where?

The manufacturing facilities of the company which are spread across several countries in Asia and Africa has a capacity of 86000 MT per annum. Their main processing facility is located near Jaipur, Rajasthan in India is ISO 9001-2000 certified and has a capacity of 27600 MT per annum. The company is also operating thorough eight fully owned subsidiaries and associated companies in international markets.

How ?

Gravita imports lead scrap from several sources like lead batteries, plates, cable stripping, blocks etc and lead ores to manufacture the products. They are engaged in recycling and smelting activities

Since When?

Gravita is into the manufacture of Lead for the last 15 years.They started their business in 1992-93 in the business of welding technology and powder metallurgy of surface coatings. They diversified in 1997-98 into manufacture of Lead. Gravita came out with an IPO in the year 2010 and was listed on BSE & NSE.

Share Holding

As per the latest available data, the company has a paid up capital of INR 136.35 Million. The holding pattern is as follows:

Type of Investors	% of Holding
Promoter Group	73.42
Foreign Institutional Investors	7.67
Bodies Corporate	8.53
Other investors (individuals)	10.38

A graphic representation of the same is as follows

The company is a closely held one with promoters controlling 73.42% of the share holding. Currently none of the MF hold stake in this company. With regards to the retail investors, around 95% of the shares held by Individual investors is held by those owning less than 5000 shares.

Management

Designation
Mahavir Prasad Agarwal	Chairman & Whole Time Director
Rajat  Agrawal	Managing Director / Chief Executive Officer
Rajeev  Surana	Whole Time Director
Mrs. Leena  Jain	Company Secretary & Compliance Officer
Mr. Naveen Prakash Sharma	President & Chief Executive Officer

The management is experience in the business for more than 3 decades and committed to the activity as can be seen from the promoter holdings remaining relatively unchanged over the years.

Products & Markets

Company is involved in manufacture of Lead alloys, sheets, Lead chemicals etc. Most of these products find use mainly in automobile market in the form of Lead Acid Batteries. Automobile markets in India were subdued 2012-13 and contunues to be in the same state in the current financial year also. The company being dependent on the automobile market to a large extent will also feel the effects of such a slow down in supplier markets. To mitigate this effect the company has expanded into international markets and in domestic markets is concentrating on other sectors which also find use for the lead like roofing, power generation etc.

The global market also has seen substantial fluctuations in Lead prices as well as the stocks. Also there is an oversupply of Lead in the international markets which result in reduction of margins. This is also expected to continue further in this year also. To derisk from this reduction in margins the company is concentrating on emerging markets and roofing, towers, turnkey solutions which improve the margins.

Financials

Financial performance of the company over the last three years is as follows

(INR in Million)

	2010-11	2011-12	2012-13
Sales	1587.67	2536.82	4022.7
PBIT	166.37	197.34	324.3
Interest	7.34	15.62	55.8
PAT	132.16	143.79	235
Share Capital	100.2	136.2	136.2
Reserves	192.92	638.71	857.65
Loan Funds	212.21	285.68	938.22
Current Ratio	3.03	4.27	1.61
Interest Coverage	20.06	7.89	4.21

Company's activities grew substantially over the last three financial years resulting in more than doubling of the balance sheet size. Though most of this growth is financed through loan funds, the company was able to plow back substantial amounts to reserves. Also the interest coverage is still a comfortable 4 times. Any fall in this ratio below 3 may have troubles for the company

Performance in 2013-14

Gravita achieved a 11% growth in turnover from INR 66.79 million in quarter ended 30^th June 2013 to INR 74.74 Million in September 2013. The net profit doubled over the previous quarter. However the net profit declined from INR 4.73 Million in the September 2012 to INR 1.12 Million in September 2013 due to a slowdown in the automobile markets.

Stock Market Performance

Stock market performance of Gravita is as follows

52 Week High (adjusted)	172.00(30/01/2013)
52 Week Low (adjusted)	20.80(24/06/2013)
52 Week High (Unadjusted)	172.00(30/01/2013)
52 Week Low (Unadjusted)	20.80(24/06/2013)
Month H/L	53.45/35.90
Week H/L	49.60/45.35

Due to a stock split in May 2012, there is a adjustment of stock prices in that year. The performance largely is inline with the index performance in most 2012 and 213 which is basically subdued. During the last 4 months there is a 75% increase in the stock price of Gravita which considering the expected good performance in last quarter may continue to go up further.

Dividends

Gravita is consistently paying dividends in the last three years. The company paid interim dividends based on the performance upto the particular quaters. The dividend data is as follows

	Dividend Per Share
22 Jul 2013	0.3
06 Feb 2013	0.3000
05 Sep 2012	0.2000
30 Jul 2012	0.6000
15 Feb 2012	1.0000
20 Jul 2011	4.0000

Future Outlook

Though the automobile market continues to be in a subdued mode with most of the automobile companies and spares suppliers reporting losses or reduced profits. However, the sector is expected to comeout of these lows possibly in second quarter of 2014. The may be a filip to economy around the same time due to a possible change of government in general elections. Apart from this the company is concentrating on other markets and other business activities like turnkey projects to de-risk its business. A good performance from this stock can be expected in the coming months.

Disclaimer

The above is prepared from the public sources available through internet and company financial reports and is not sponsored by the company. This is not an invitation to invest in this company. Nor this is a financial advice solicited / unsolicited. The investors are expected to do their own due diligence prior to taking any investment decision.