Volume driven growth lifts Grasim's net - Views on News from Equitymaster

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Volume driven growth lifts Grasim's net

Apr 29, 2000

Grasim Industries Limited has posted a sharp 42% rise in net profits during the year ended 31st March 2000. The company has benefited largely from the volume driven growth in the cement and viscose staple fibre business (VSF). The company has suffered a marginal decline in operating margins during the period. This is largely due to the fact that realisations in the VSF and cement businesses were lower during the year. However, a decline in interest costs helped lift overall net profit margins to 5.5%.

The stock currently trades at Rs 330, implying a P/E of over 10x. The stock has sharply come off its 52 week high of Rs 550. Its current P/E is also the lowest as compared to the closing P/Es during the last three years (FY97 - 18, FY98 - 12.6, FY99 - 16.6).

(Rs m) FY1999 FY2000 Change
Turnover (net) 37,570 42,730 13.7%
Operating Profit (EBDIT) 6,780 7,560 11.5%
Operating Profit Margin (%) 18.0% 17.7%  
Interest 2,920 2,560 -12.3%
Depreciation 2,100 2,370 12.9%
Profit before Tax 1,760 2,630 49.4%
Other Adjustments 40 180 350.0%
Tax 80 120 50.0%
Profit after Tax/(Loss) 1,640 2,330 42.1%
Net profit margin (%) 4.4% 5.5%  
Earnings per share 22.68 32.23 42.1%


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