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This is an entirely free service. No payments are to be made.Grasim Industries announced its 2QFY11 results. The company has reported marginal decline in consolidated sales and nearly 37% YoY fall in net profits for the quarter. Here is our analysis of the results.
(Rs m) | 2QFY10 | 2QFY11 | Change | 1HFY10 | 1HFY11 | Change |
Net sales | 46,744 | 44,390 | -5.0% | 97,576 | 94,942 | -2.7% |
Expenditure | 31,937 | 37,179 | 16.4% | 66,993 | 74,692 | 11.5% |
Operating profit (EBITDA) | 14,807 | 7,211 | -51.3% | 30,583 | 20,250 | -33.8% |
EBITDA margin | 31.7% | 16.2% | 31.3% | 21.3% | ||
Other income | 1,497 | 1,625 | 8.6% | 2,527 | 3,222 | 27.5% |
Interest | 831 | 974 | 17.2% | 1,654 | 1,886 | 14.0% |
Depreciation | 2,424 | 2,727 | 12.5% | 4,822 | 5,399 | 12.0% |
Profit before tax/(loss) | 13,050 | 5,134 | -60.7% | 26,634 | 16,187 | -39.2% |
Extraordinary Item | - | - | 3,360 | - | ||
Tax | 4,231 | 1,508 | -64.4% | 8,639 | 4,705 | -45.5% |
Share in profit of associates | 107 | 75 | 273 | 187 | ||
Minority Share | 1,117 | 468 | 3,019 | 2,683 | ||
Profit after tax/(loss)** | 7,808 | 3,234 | -58.6% | 15,249 | 8,986 | -41.1% |
Net margin | 16.7% | 7.3% | 15.6% | 9.5% | ||
No of shares (m) | 91.7 | |||||
Diluted EPS (Rs)* | 247.4 | |||||
P/E (times) | 9.6 |
**Samruddhi Cement Limited (SCL), a subsidiary of the Company, into which the erstwhile Cement Business of the Company was demerged w.e.f. 1st October, 2009 has been amalgamated with UltraTech Cement Ltd. (UltraTech), another subsidiary of the Company, w.e.f. 1st July, 2010. Accordingly, the shareholders of SCL have been issued shares by UltraTech in lieu of shares of SCL. As a result, the shareholders of the Company have direct participation in UltraTech and also shareholding of the Company in UltraTech stand increased to 60.34%. The Net Profit (after Minority Share) for the quarter and half year ended 30th September, 2010 is therefore not strictly comparable with that of the corresponding periods of the previous year. Grasim's shareholders hold 19.1% share in UltraTech. As a result, the pro-rata profit belonging to them has been reduced as minority share. If added back for better comparison, the net profit for the quarter works out to Rs 3460 million.
Segment | 2QFY10 | 2QFY11 | Change |
Cement | |||
Revenues | 36140 | 32850 | -9.1% |
% of total | 77% | 74% | |
Realsation (Rs / ton) | 3675 | 3021 | -17.8% |
VSF | |||
Revenues | 8509 | 8555 | 0.5% |
% of total | 18% | 19% | |
Realsation | 105217 | 116465 | 10.7% |
Chemicals | |||
Revenues | 1313 | 1200 | -8.6% |
% of total | 3% | 3% | |
Realsation (Rs / ton) | 19057 | 19403 | 1.8% |
The company expects VSF demand to continue to grow in the long term as textile consumption in India increases with growth in population and income levels. The Company plans to set up an 120,000 TPA VSF plant at Vilayat (Gujarat) at a cost of Rs 1,690 cr. The product mix will be in line with the market needs. The Company's capacity at Harihar (Karnataka) will be enhanced by 36,500 TPA through a brownfield expansion at a cost of Rs 449 crores. Both the projects are slated for commissioning by FY13.
The stock is currently trading at 9.6 times trailing 12 month earnings. We retain our view on the stock.
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