Grasim Results Review: Net Profit Beats Estimates as Revenues Rise 182%

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

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  
  • Home
  • Views On News
  • Aug 16, 2021 - Grasim Results Review: Net Profit Beats Estimates as Revenues Rise 182%

Grasim Results Review: Net Profit Beats Estimates as Revenues Rise 182%

Aug 16, 2021

Textile firm Grasim on Friday reported a net profit of Rs 4.8 bn for the quarter ended June 2021. This compared with a net loss of Rs 2.8 bn in the year-ago quarter.

The bottomline figures for the flagship company of Aditya Birla Group, were largely above estimates as the street was expecting Grasim to report net profit of Rs 3.2 bn.

Revenues during the quarter jumped 182% year on year (YoY) to Rs 37.6 bn, which was below expectations.

The jump in revenues can be attributed to a depressed base in the year-ago quarter, which was impacted by the national lockdown.

On the operating front, Grasim's earnings before interest, taxes, depreciation, and amortisation (EBITDA) came in at Rs 7.4 bn in the first quarter of the current financial year. It had reported an EBITDA loss of Rs 2.3 bn in the year-ago period.

--- Advertisement ---
Watch this Before Investing Your Money in EV Stocks

On Monday, we revealed this massive 15x opportunity in electric vehicles.

And also shared the details of 3 EV stocks to ride this mega opportunity.

Now, these are not typical EV stocks. Instead, these are what we call the backdoor EV stocks.

As per our research, the best way to ride the 15x EV wave is through these 3 stocks only.

You can get full details by watching this video...
------------------------------

Grasim's total expenses saw a steep rise of 79.4% YoY to Rs 32.8 bn as cost of raw materials increased more than three times in the June quarter.

While the benefit of fixed cost saving continues, freight has emerged as a major challenge in international markets and overall raw material prices have gone up across businesses.

Here's a table comparing Grasim's results on key parameters.

Financial Snapshot

(Rs bn) Jun-21 Jun-20 Mar-21
Revenue from operations 37.6 13.4 43.9
Cost of raw materials 18.3 5.4 18.0
Total expenses 32.8 18.3 38.5
EBITDA 8.1 -1.3 8.8
Profit after tax 4.8 -2.8 4.8
Data Source: Investor Presentation

Lower demand leading to inventory accumulation

Due to the second wave, Grasim's demand was impacted in the textile industry that affected its viscose business.

India observed selective restrictions on the business activities during most of June 2021 quarter, which impacted the sale of textile products.

This, in turn, led to accumulation of inventory in the value chain. The inventory went from a low of 13 days in March 2021 to 24 days in June 2021.

However, Grasim's chemical business did well and stayed resilient from the impact of second wave.

The company highlighted that increase in soda ash prices in the domestic market was muted even as global surge continued during the June quarter.

The demand for chlorine value added products remained subdued in June quarter due to demand impact from MSME on account of second wave.

On its capex plan, Grasim said commissioning of VSF expansion of two lines at Vilayat, Gujarat is as per schedule.

--- Advertisement ---
[Alert] Sell These 3 Stocks Immediately

These 3 stocks are ticking time bombs in your portfolio.

It is very likely that you could be owning these 3 overvalued...

fundamentally weak... ready to crash stocks... in your portfolio today.

Because many stock brokers have painted rosy pictures of these stocks. But the reality is starkly different.

If the market crashes, then these stocks could wipe out your wealth.

You should get rid of these stocks as soon as possible.

Click her for full details of these 3 landmines
------------------------------

Paint business and business commentary highlights

Grasim is making brisk progress in line with the plans of foraying into the paint business. Earlier this year in January, Grasim had informed to enter into the paint industry.

The company said land acquisition for setting up plants at different states is in process, and simultaneously project engineering plans are also progressing.

In its commentary, Grasim's management said domestic demand for fiber is witnessing a gradual uptick, with the easing of restrictions across states.

VSF expansion at Vilayat has progressed as per schedule and the first line of 300 TPD is expected to be commissioned in the September 2021 quarter.

Divestment of its fertiliser business is also expected to be completed in September quarter. The management has guided at an enterprise value of Rs 16 bn as against its earlier guidance of Rs 26.5 bn as it has received Rs 10 bn of government subsidies, due earlier.

Grasim's standalone gross debt stood at Rs 48.6 bn and net debt stood at Rs 18.2 bn versus Rs 9.1 bn in March 2021.

CCI heat

Recently, the Competition Commission of India (CCI) blamed the company for 'misusing' its dominant market position in Viscose Staple Fiber (VSF).

This heat from CCI comes at a time when the Directorate General of Trade Remedies (DGTR) has recommended the withdrawal of anti-dumping duty (ADD) on VSF imported from China and Indonesia, a move that may cut the product's prices in India and affect the revenue of Grasim.

Grasim is the sole producer of VSF in India.

According to experts, prices are expected to drop by Rs 5-6 per kg once anti-dumping duty is lifted, which will be a huge boost for spinners in India. VSF is the only product that invites an anti-dumping duty in the textile industry.

Instant Updates: Join Our Telegram Channel and Get Instant Updates

How the stock markets reacted to Grasim's earnings

Grasim Industries share price opened the day on a flat note at Rs 1,498 on the BSE.

It rose 1% to Rs 1,524.35 in early trade but erased gains as the session progressed and fell 0.5%.

Grasim shares have a 52-week high of Rs 1,614.35 touched earlier this month on 2 August.

They have a 52-week low of Rs 611 touched on 17 August 2020.

Over the past one year, Grasim shares have gained 137%. Since the start of this year, they are up 60%.

At the current price of Rs 1,491, the company commands a marketcap of Rs 981.5 bn.

Promoters held 42.1% stake in the company as of June 2021, while FIIs held 15.1% stake.

To know more, check out Grasim's latest shareholding pattern.

About Grasim

Grasim Industries is a flagship company of the Aditya Birla group. It commenced production in 1954 at Nagda (Madhya Pradesh) facility and its business has grown steadily over six decades.

The company's VSF division has four fibre plants, one pulp plant in India and four international joint ventures.

In 1972, Grasim's chemicals business was set up to manufacture caustic soda for the company's VSF unit.

As of March 2021, it had eight caustic soda manufacturing units across India with a total capacity of 1.14 m tonnes per annum dedicated for both captive and external sales.

To know more about the company, check out Grasim Industries company fact sheet and quarterly results.

For a sector overview, read our textiles sector report.

You can also compare Grasim with its peers.

Grasim vs Century Textiles

Grasim vs SRF

Grasim vs DCM Shriram

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...

Equitymaster requests your view! Post a comment on "Grasim Results Review: Net Profit Beats Estimates as Revenues Rise 182%". 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 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.

Raymond Shares Gain 5% on this Unexpected Move (Views On News)

Sep 28, 2021

Raymond to rejig business to create value for shareholders.

7 Indian Companies that Swear by Buffett's No-Split Rule (Views On News)

Sep 28, 2021

Just like Warren Buffett's Berkshire Hathaway, these Indian companies have not split their shares.

Top Performing Penny Stocks of 2021 (Views On News)

Aug 28, 2021

Several penny stocks have delivered multi-fold returns in a short span of time. Here are a few of them.

More Views on News

Most Popular

Tata Group Stocks are on Fire: Which one Should You Buy? (Profit Hunter)

Oct 15, 2021

Tata group stocks are on fire. Find out which one deserves your attention.

India's Big PSU Selloff: Watch Out for these Top Stocks (Views On News)

Oct 15, 2021

The government's plan to divest its stakes in PSUs could spark off a rally in these four stocks.

Up 31,500% in a Year! This Packaging Company Sheds its Penny Stock Status (Views On News)

Oct 18, 2021

What's driving the relentless rally in this packaging company?

Insider Alert! Promoters are Increasing their Stakes in these 5 Companies (Views On News)

Oct 19, 2021

Promoters of many small and mid-cap companies are raising their stakes since the last few quarters.

The One Company Riding the Auto Revolution Beyond EVs (Profit Hunter)

Oct 22, 2021

It's not just about batteries taking over the internal combustion engine. Bigger disruptive forces are coming along with electrification.

More

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

GRASIM SHARE PRICE


Oct 27, 2021 (Close)

TRACK GRASIM

GRASIM - KESORAM IND COMPARISON

COMPARE GRASIM WITH

MARKET STATS