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Informist, Thursday, Nov. 14, 2024

By Anand J.C.

MUMBAI – The net profit of Grasim Industries Ltd. for Jul-Sept missed Street estimates, falling 9% on year on account of higher expenses and higher tax costs. The company's net profit came in at INR 7.21 billion. Analysts had estimated it at INR 8.83 billion.

The revenue from operations of Grasim Industries for the September quarter was INR 76.23 billion, 18.3% up from INR 64.42 billion a year ago. The top line was also slightly higher than analysts' forecast of INR 75.40 billion. The company's other income for the reporting quarter rose to INR 12.94 billion, 70% higher on year and several times higher than INR 930 million for Apr-Jun. Motilal Oswal Financial Services Ltd. had expected an uptick of 65% on year in other income driven by higher dividend income from the company's cement subsidiary, Ultratech Cement Ltd.

The company's earnings before interest, taxes, depreciation, and amortisation for the September quarter was INR 16.19 billion, up 20% on year. EBITDA margin for the quarter contracted 100 basis points on year to 18%.

EXPENDITURE

The total expenses incurred by the company for the September quarter were INR 78.65 billion, 25.9% lower on year. The cost of materials consumed was INR 37.49 billion, 22.5% higher on year. Employee benefits expense also rose 22.5% on year to INR 6.53 billion. Finance costs for the reporting quarter were INR 1.62 billion, 51.1% higher on year.

Depreciation and amortisation expenses were INR 4.06 billion, 39% higher on year. Power and fuel costs remained unchanged on year at INR 10.17 billion while other expenses for Jul-Sept were INR 13.98 billion, 55.3% higher on year. The total tax expenses incurred during the reporting quarter were INR 2.80 billion, 75% higher on year.

SEGMENT PERFORMANCE

The consolidated revenue from Grasim Industries' cellulosic fibres business for Jul-Sept was INR 41.25 billion, 6.1% higher on year. The segment registered its highest ever cellulosic fibre sales volume in a quarter of 219,000 tonnes. The segment's consolidated operating profit rose 6% on year on the back of volume growth and lower input costs. The improving demand scenario in China has led to a third consecutive quarter of improvement in the price of cellulosic fibres to $1.65/kg in Jul-Sept, from an average of $1.51/kilogram in Oct-Dec of the previous financial year, the company said in a press release.

The chemicals segment's revenue for the reporting quarter was INR 20.54 billion, up 3.3% on year. The consolidated EBITDA of the chemicals segment rose 16% on year on the back of improved profitability in chlorine derivatives and speciality chemicals, the company said in an investor presentation.

The building materials segment, which includes cement, paints, and the business-to-business e-commerce business, reported a revenue of INR 166.83 billion, 3.3% higher on year. UltraTech added new grey cement capacity of 9.9 million tonnes per annum in the current financial year till October, taking its overall grey cement capacity in India and abroad to 156.1 million tonnes per annum, the company said in a press release.

The production ramp-up at its paints business Birla Opus, which began in the June quarter, is underway, and trial runs have commenced at the company's Chamarajanagar and Mahad plants, Grasim Industries said. The consolidated EBITDA of the building materials segment was INR 18.86 billion, down 28% on year on the back of lower realisations in the cement business and initial investments to build Birla Opus, the company said.

The company's financial services segment reported a revenue increase of 33% on year, at INR 102.52 billion. The total lending portfolio stood at INR 1.38 trillion as of Sept. 30, 27% higher on year, the company said.

CAPEX, DEBT

The capital expenditure incurred by Grasim Industries in Apr-Sept was INR 18.84 billion. The company has budgeted standalone capital expenditure of INR 46.91 billion for financial year 2024-25 (Apr-Mar). The board has approved an investment of INR 2.87 billion for an additional pulp capacity at Harihar in Karnataka, of which INR 1.18 billion will be spent in FY25. The board has also approved INR 200 million capital expenditure for the textiles business.

The net debt of Grasim Industries increased to INR 235.39 billion as of Sept. 30 from INR 154.36 billion as of Mar. 31. The company said that with its significant presence across businesses, it is well positioned to capitalise on opportunities in diverse sectors of the fast-growing Indian economy.

For Apr-Sept, the net profit of Grasim Industries was INR 6.69 billion, down 41.9% on year, while revenue from operations was 14.5% higher on year at INR 145.17 billion. 

On Thursday, shares of Grasim Industries ended 0.8% higher at INR 2,523.95 on the National Stock Exchange. The company disclosed its September quarter results after market hours.  End

Edited by Rajeev Pai

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