X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Grasim: VSF surprises - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Jul 25, 2002

    Grasim: VSF surprises

    Grasim, the diversified major, has announced a 3% increase in net profits on the back of a 2% rise in total revenues on a YoY basis. The company's cement division managed a 9% increase in dispatches on a YoY basis. The company has improved its operating margins by 190 basis points in the quarter ended June '02.

    (Rs m) 1QFY02 1QFY03 Change
    Net Sales 11,172 11,355 -4.1%
    Other Income 145 93 -36.1%
    Expenditure 8,840 8,901 -6.4%
    Operating Profit (EBDIT) 2,332 2,455 5.3%
    Operating Profit Margin (%) 19.7% 21.6%  
    Interest 475 442 -7.0%
    Depreciation 626 624 -0.3%
    Profit before Tax 1,376 1,481 7.7%
    Extraordinary items (24) (17)  
    Tax (330) (410) 24.2%
    Profit after Tax/(Loss) 1,022 1,055 3.2%
    Net profit margin (%) 8.6% 9.3%  
    No. of Shares 72.3 72.3  
    Diluted Earnings per share* 56.5 58.4  
    P/E Ratio   5.6  
    (* annualised)      

    On the operational front the company has managed to maintain its operating expenses inspite of large volumes in both cement and VSF by cutting down on raw material, staff and other expenses. The company has seen a major decrease in raw material costs, this may have been the result of better procurement practises resulting from higher utilisation. The company could also have benefitted due to its alliance with L&T in which it acquired 13% stake. Both companies have a huge procurement order size and could have benefitted from low prices due to bulk purchases.

    The company has reported a 5% growth in its operating profits due to improved operational efficiencies. The higher efficiency has resulted in reduced working capital, which has declined by over Rs 1 bn. The interest expenses have gone down by 7% in the June quarter on a YoY basis. The extraordinary item is the expenses incurred by the company on account of the VRS scheme initiated in order to rationalise the workforce across all the divisions of the company.

    The VSF division of the company has reported excellent performance withe sales volumes increasing by 48%, completely offsetting the 8% fall in realisations on a YoY basis. The exports initiatives of the company have paid off, as exports of the company have doubled in 1QFY03 while the total turover of the division has gone up by 35%.This is inspite of the fact that of its fibre plant at Nagda had been suspended for 27 days on account of water shortage. Grasim's cement division has reported growth of 9% in cement dispatches. Though the dispatches have gone up the realisations have been under pressure and this may have been the reason for a flat growth in the topline. The chemical business has shown improved production which has led to a 21% increase in its turnover. The sponge iron business has continued to show poor results reporting a 21% fall in turnover.

    The stock is currently trading at Rs 326 on a P/E multiple of 6x FY03 annaulised earnings. The company has benefitted immensly from the restructuring exercise, which has helped pare down costs on all fronts. Due to its diversified businessess the company has been able to hedge itself against low cement realisations which have adversly affected cement majors like ACC. The VSF business has been the star performer this quarter and it looks as if the present momentum in the division is likely to continue going forward. The VSF business cycle seems to be on an upturn, as demand is rising. The VSF business has contributed 54% to the operating profits of the company compared to just 28% in the previous year. This shows a definite upturn in the business.

    Cement has been identified as the growth driver for the company and the good dispatch figures indicate agressive initiatives to increase market share across the country. The company's alliance with L&T is likely to give Grasim further benefits on the operational front. Grasim could emerge as the largest player in the cement industry, as and when L&T divests the cement business. Being the third largest cement producer in the country, Grasim is in a good position to meet demand from the various regions in the country.

     

     

    Equitymaster requests your view! Post a comment on "Grasim: VSF surprises". Click here!

      
     

    More Views on News

    UltraTech: Post-Acquisition Cement Capacity Augmented to 93 MTPA (Quarterly Results Update - Detailed)

    Aug 11, 2017

    UltraTech Cement completed the acquisition of cement plants of Jaiprakash Associates Limited (JAL) and Jaypee Cement Corporation Limited (JCCL) during the quarter ended June 2017.

    Ambuja Cement: Fall in Other Income Drag Bottomline Lower (Quarterly Results Update - Detailed)

    Aug 11, 2017

    While topline witnessed growth on the back of higher cement sale volumes, a 50.5% YoY fall in other income weighed on Ambuja's bottomline during the quarter ending June 2017.

    ACC: Cementing Growth through Capacity Expansion and Favorable Sectoral Developments (Quarterly Results Update - Detailed)

    Jul 20, 2017

    Expanded capacity helped ACC strengthen its market presence in eastern region during the quarter ended June 2017.

    UltraTech: One of the Weakest Quarters in Years (Quarterly Results Update - Detailed)

    May 18, 2017

    Cement demand was weak because of subdued housing demand, volatile cement prices, and rising fuel costs.

    Ambuja Cem: Net Profits zoom up 361% YoY During Jan-March Quarter (Quarterly Results Update - Detailed)

    May 8, 2017

    Stock price jumps up on Ambuja-ACC merger talks...

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    GRASIM IND. SHARE PRICE


    Aug 22, 2017 01:06 PM

    TRACK GRASIM IND.

    • Track your investment in GRASIM IND. with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    GRASIM IND. - ARVIND LTD. COMPARISON

    Compare Company With Charts

    COMPARE GRASIM IND. WITH

    MARKET STATS