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Grasim: OPM dip flattens bottomline growth - Views on News from Equitymaster
 
 
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  • Jul 26, 2000

    Grasim: OPM dip flattens bottomline growth

    Grasim Industries Limited has posted a 10% growth in topline during the quarter ended 30th June 2000. However there is only marginal growth in profit after tax as there has been a decline in operating margins and the fact that the company has had to incur higher depreciation (on account of commissioning of a new cement plant).

    (Rs m) 1QFY00 1QFY01 Change
    Sales 10,979 12,122 10.4%
    Other Income 41 97 134.1%
    Expenditure 9,098 10,336 13.6%
    Operating Profit (EBDIT) 1,881 1,787 -5.0%
    Operating Profit Margin (%) 17.1% 14.7%  
    Interest 707 613 -13.3%
    Depreciation 584 623 6.6%
    Profit before Tax >632 >648 2.5%
    Other Adjustments >-5 >-14  
    Tax 38 40 6.7%
    Profit after Tax/(Loss) 590 594 0.8%
    Net profit margin (%) 5.4% 5.0%  
    Diluted No. of Shares (eoy) (m) > 72.3 > 72.3  
    Diluted Earnings per share* >32.6 >32.9  
    *(annualised)      

    During FY00, Grasim had earned an operating margin of 13.4%. Its operating performance in the current quarter compares well with this. On a YoY basis, however there has been a decline in operating margins.

    The company’s VSF, sponge iron and chemicals businesses have posted healthy growth in this quarter. Cement capacity utilization levels too have improved, although realisations have been under pressure in this division. However, the recent upturn in cement prices is likely to augur well for the company.

    The stock currently trades at Rs 237, implying a P/e multiple of 7x.

     

     

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