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Informist, Monday, Feb. 10, 2025

 

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-- Grasim Oct-Dec net loss INR 1.69 bln
-- Three analysts saw Grasim Oct-Dec net profit at INR 249.67 million
-- One analyst saw Grasim Oct-Dec net loss at INR 916 million
-- Grasim Oct-Dec net loss INR 1.69 bln vs INR 2.36 bln PAT year ago
-- Grasim Oct-Dec revenue INR 81.20 bln vs INR 64.00 bln year ago
-- Grasim Apr-Dec net profit INR 5.00 bln vs INR 13.86 bln year ago
-- Grasim Apr-Dec revenue INR 226.37 bln vs INR 190.80 bln year ago
-- Grasim Oct-Dec EBITDA INR 3.72 bln vs INR 6.43 bln year ago
-- Grasim Oct-Dec EBITDA margin 5% vs 10% year ago
-- Grasim cellulosic staple fibre sales volume 205,000 tn, flat on year
-- Grasim cellulosic staple fibre volume flat on disruption at Gujarat plant
-- Grasim cellulosic fibre revenue INR 39.34 bln, up 6% on year
-- Grasim cellulosic fibre EBITDA INR 3.31 bln, down 18% on year
-- Grasim caustic soda sales volume 303,000 tn vs 299,000 tn year ago
-- Grasim Oct-Dec chemicals revenue INR 22.26 bln, up 12% on year
-- Grasim Oct-Dec chemicals EBITDA INR 3.29 bln, up 25% on year
-- Grasim paints capex INR 90.15 bln Dec 31, 90% of planned outlay
-- Grasim: Harikrishna Agarwal to retire as MD from Mar 31
-- Grasim Apr-Dec standalone capex spent  INR 27.85 bln
-- Grasim: Appointed Himanshu Kapania as MD for 3 yrs from Apr 1
-- Grasim planned capex FY25 INR 46.91 bln
-- Grasim standalone net debt INR 82.77 bln Dec 31 vs INR 59.81 bln Mar 31
 

 

By Rajesh Gajra

 

NEW DELHI – The Aditya Birla Group's flagship company Grasim Industries Ltd.'s results for the December quarter were below analysts' estimates on revenue and net profit on a standalone basis, with the bottom line slipping into the red. The net loss came on the back of a sharp contraction in the company's operating margin, even though the net revenue from operations growth was the highest in nine quarters.

 

Grasim reported a standalone net loss of INR 1.69 billion for the December quarter, compared with a net profit of INR 2.36 billion a year ago. Although the Street was also expecting the chemicals company to post a net loss, the estimated net loss was much lower at INR 42 million. The company's net revenue from operations rose 27% on year to INR 81.20 billion but missed analysts' estimate of INR 81.72 billion.

 

Grasim's standalone operating margin contracted substantially to 3.68% in the December quarter from 8.51% a year ago, as per a note to accounts to the standalone financials statement of the company.

 

Data from the company's earnings investor presentation showed the earnings before interest, tax, depreciation, and amortisation, fell sharply by nearly 58% on year to INR 3.72 billion in the December quarter, with the EBITDA margin contracting significantly to 5% from 10% a year ago.

 

In the cellulosic staple fibre segment, earlier called viscose staple fibre segment by the company, the sales volume was flat on year at 205,000 tonnes. The company said in the investor presentation that the volume growth was flat "due to production disruption at Excel Kharach". The segment's revenue increased 6% on year to INR 39.34 billion, but the EBITDA fell 18% to INR 3.31 billion. According to the company's investor presentation, the EBITDA fell mainly due to higher key raw material costs such as "DG pulp, caustic, and sulphur".

 

In Grasim's chemicals segment, which makes and sells chlor-alkali, chlorine derivatives, and specialty chemicals, the caustic soda sales volume inched up by 1% to 303,000 tonnes in the December quarter from 299,000 tonnes a year ago. The volume growth, according to the company, was "constrained due to production limit at Vilayat on account of lower power availability".

 

The overall revenue of the chemicals segment increased 12% on year to INR 22.26 billion for the December quarter. The segment's EBITDA rose 25% on year to INR 3.29 billion. According to the company, this was "driven by improved realisation of caustic soda and improved profitability in chlorine derivatives".

 

PAINTS UPDATE

In Grasim's recently launched paints business, where capital expenditure of INR 90.15 billion, or about 90% of planned outlay, has been incurred till Dec. 31, the company did not reveal the sales and EBITDA numbers, like in previous quarters. But it said in the investor presentation that the segment witnessed "good demand" in the December quarter "from contractors and consumers at the dealers network leading to increase in counter share".

 

Although the company does not disclose the sales volume, revenue, operating expenses, and EBITDA numbers for the paints segment, analysts believe that with every quarter a chunk of the costs associated with advertisement campaigns in an extensive outreach to dealers across the country, discounts, operationalising 131 depots across India, the second biggest depot network after that of Asian Paints Ltd., and operating and maintaining four paint factories that are already operational, would be getting charged to the profit and loss account.

 

The EBITDA in the company's two key segments, cellulosic staple fibre and chemicals, added up to INR 6.60 billion, but the overall EBITDA at the standalone level was only INR 3.72 billion. This indicates an operational loss in segments other than cellulosic staple fibre and chemicals, and the paints segment, along with the business-to-business ecommerce platform, are the only two other notable segments of the company at the standalone level.

 

The company does not disclose earnings numbers for the business-to-business ecommerce segment either. The company said in an earnings press release that the business-to-business ecommerce business revenue continues to grow in line with the plan and remains on track to achieve revenue of around INR 80 billion by the financial year 2026-27 (Apr-Mar). Grasim said the product categories on offer in this segment have risen to 35 and the business "continues to expand its geographical reach with delivery to 375 cities across 26 states and Union territories".

 

In addition to the sharp fall in EBITDA and EBITDA margin in the December quarter, Grasim's bottom line was adversely affected by a 69% jump up in finance costs to INR 1.81 billion and a 42% rise in depreciation costs to INR 4.21 billion. The finance costs were up amid a rise in net debt to INR 82.77 billion as of Dec. 31 from INR 59.81 billion as of Mar. 31.

 

The standalone capital expenditure incurred by Grasim Industries in the nine months to December was INR 27.85 billion. The total planned capital expenditure for FY25 is INR 46.91 billion, indicating a potential capital expenditure of around INR 19.00 billion in the March quarter. Of the capital expenditure planned for FY25, INR 29.76 billion is towards the paints business, where INR 19.52 billion was spent in Apr-Dec.

 

In Apr-Dec, Grasim's standalone net profit was down 64% on year to INR 5.00 billion against a 19% rise in revenue from operations to INR 226.37 billion. The company announced in a stock exchange filing that Managing Director Harikrishna Agarwal will retire "early" on Mar. 31. From Apr. 1, Himanshu Kapania, the current business head for the paints segment, will be appointed as managing director for three years and one month, subject to shareholders' approval.

 

On Monday, Grasim Industries shares ended at INR 2,473.25 on the NSE, down 0.6% over Friday.  End

 

Edited by Rajeev Pai

 

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