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Informist, Monday, Jul 22, 2024

 

By Rajesh Gajra

 

MUMBAI – Higher volume in both key segments, viscose and chemicals, is expected to have propelled Grasim Industries Ltd's standalone revenue growth in the quarter ended June on an annual basis. However, lower realisations, higher costs, operating margin contraction, and higher tax would likely have led to a fall in the bottomline of the company. The Aditya Birla Group's flagship chemicals company's net profit has fallen on year for six consecutive quarters till the March quarter, data from Informist Credit Standard Database showed.

 

In Apr-Jun, the company's net profit is expected to be 1.52 bln rupees, while the revenue from operations is seen at 73.12 bln rupees, as per an average of estimates by four brokerage houses. The net profit figure is 57% lower against the year-ago quarter, and also down 66% on quarter. The revenue is 17.2% higher on year and 8.1% sequentially.

 

The estimates for the net profit range from 1.02 bln rupees to 2.31 bln rupees, while the revenue estimates range from 69.04 bln rupees to 76.31 bln rupees. The estimates for earnings before interest, tax, depreciation, and amortisation is given by three brokerages in the range of 4.88 bln rupees to 5.73 bln rupees.

 

According to brokerage Motilal Oswal Financial Services, Grasim's Apr-Jun revenue in the viscose staple fibre segment will increase 6% on year amid a 13% volume growth and a 6% sales realisation decline. In the quarter ended March, Grasim's viscose fibre segment recorded flat revenue growth to 37.62 bln rupees, aided by 8% volume growth but reined in by lower realisations. Sequentially, Grasim's viscose staple fibre volume will decline 0.4% in the June quarter, according to brokerage Kotak Securities' Institutional Equities Research.

 

Motilal Oswal Financial Services expects the chemicals segment's revenue in the June quarter to increase 5% on year on the back of a 11% volume growth partly offset by a 6?cline in sales realisation. In the previous quarter, the chemicals segment's revenue fell 13% on year to 20.83 bln rupees due to lower realisation even as caustic soda volumes increased 7.7%.

 

The chemicals segment's profitability is seen getting hit by operating losses in the new paints division, which commenced operations in April, according to Kotak Institutional Equities. The brokerage expects the segment's EBITDA in Apr-Jun to fall sharply by 30% on year. Motilal Oswal Financial Services also expects the segment's EBITDA to fall 17% on year with the margin contracting sharply by 250 bps to 8%.

 

Grasim is yet to announce date of the board meeting when the Apr-Jun financial results will be taken up. Post results, investors are likely to monitor management commentary on the performance of the paints division and the overall capex trajectory.

 

At 1422 IST, shares of Grasim traded 2.6% higher at 2,812.90 rupees on the National Stock Exchange.

 

Following are the Apr-Jun standalone earnings estimates of Grasim Industries based on reports compiled by Informist from four brokerage houses:

 

Broker name	Net Sales	Net Profit	EBITDA
	-------(In mln rupees)-------
Kotak Institutional Equities	76,312	2,310	4,882
Motilal Oswal Financial Services Ltd	69,043	1,017	5,731
Nuvama Wealth Management Ltd	73,165	1,708	5,599
Sharekhan Ltd	73,960	1,040	--
Average	73,120	1,519	--

 

End

 

Edited by Manisha Baxla

 

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