Grasim: OPM jumps 5% - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Grasim: OPM jumps 5%

Jul 31, 2001

On the back of a 5% jump in operating margins, Grasim has reported a 72% growth in net profits for the quarter ended 30th June 2001. The rise in operating margins has come about despite a marginal decline in sales, implying that Grasim was able to cut costs significantly. Added to this is the 23% decline in interest expenditure, which further boosted profits.

(Rs m)1QFY011QFY02Change
Net Sales 11,959 11,842 -1.0%
Other Income 122 145 18.8%
Expenditure 10,198 9,510 -6.7%
Operating Profit (EBDIT) 1,761 2,332 32.4%
Operating Profit Margin (%)14.7%19.7%
Interest 613 475 -22.5%
Depreciation 623 626 0.5%
Profit before Tax 648 1,376 112.3%
Other Adjustments (14) (24)
Tax 40 230 475.0%
Provision for deferred tax - 100
Profit after Tax/(Loss) 594 1,022 72.0%
Net profit margin (%)5.1%8.8%
No. of Shares (eoy) 72.3 72.3
Diluted Earnings per share* 32.9 56.6

The star performer was the company's cement division, which logged in a growth of 29%. Of this, 4.5% was volume growth, while the rest was due to higher realisations. However, it needs to be pointed out that this 24% YoY rise in prices is unsustainable as last year the pricing environment was very bad. As the year progresses, this growth in realisations will get tempered.

The VSF division was hit due to shortage of water at its Nagda plant. As a result the plant operated at a capacity utilization of 59% (last year 95%). VSF sales volumes dipped by 27% even as realisations posted an increase of 10%. Grasim was able to limit the decline in sales by building inventory in anticipation of the water supply. With a normal monsoon, the company should register a pick up in VSF volumes.

Grasim's sponge iron unit continues to suffer from shortage of natural gas. Production was down 4.5%, while sales fell 8.5%. The division however recorded a 5% increase in realisations. We are projecting a 9% topline growth for the company for FY02. We expect the bottomline to grow 29% for the full year, with operating margins at 18.3%.

The stock currently trades at Rs 314, implying a price to earnings multiple of 5.5x based on annualised 1Q earnings.

Equitymaster requests your view! Post a comment on "Grasim: OPM jumps 5%". Click here!


More Views on News

GRASIM 2020-21 Annual Report Analysis (Annual Result Update)

Oct 20, 2021 | Updated on Oct 20, 2021

Here's an analysis of the annual report of GRASIM for 2020-21. It includes a full income statement, balance sheet and cash flow analysis of GRASIM. Also includes updates on the valuation of GRASIM.

Grasim Results Review: Net Profit Beats Estimates as Revenues Rise 182% (Views On News)

Aug 16, 2021

Higher VSF exports help Grasim amid weak domestic demand.

GRASIM Announces Quarterly Results (4QFY21); Net Profit Up 12.4% (Quarterly Result Update)

Jul 8, 2021 | Updated on Jul 8, 2021

For the quarter ended March 2021, GRASIM has posted a net profit of Rs 25 bn (up 12.4% YoY). Sales on the other hand came in at Rs 244 bn (up 26.1% YoY). Read on for a complete analysis of GRASIM's quarterly results.

Nuvoco Vistas Makes a Lackluster Debut. Stock Lists at 17% Discount (Views On News)

Aug 23, 2021

Nuvoco Vistas witnessed a tepid listing on the bourses despite strong outlook for the cement sector.

Shree Cement Shares Tanks on Poor Operating Performance in the June Quarter (Views On News)

Aug 10, 2021

Shree Cement lags peers in volume growth.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

India's Top 5 Monopoly Stocks to Watch Out for (Views On News)

Nov 30, 2021

These 5 companies dominate their sectors with a huge piece of the pie.

The Biggest Winners and Losers in India's Transition to Electric Vehicles (Profit Hunter)

Nov 26, 2021

How India's EV transition could be a major headwind for the incumbents.


Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms


Dec 7, 2021 02:46 PM