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Informist, Thursday, Aug. 7, 2025

 

By Rajesh Gajra

 

NEW DELHI – The on-year growth in volume, revenue, and operating profit of Grasim Industries Ltd. in the June quarter will likely be pulled in different directions by the varying performance of its three main operating segments - chemicals, cellulosic fibre, and paints. The company's standalone top line may record a double-digit rise on a year-on-year basis on the back of higher revenue in its paints business and mid-single-digit growth in its chemicals segment.

 

The sales performance of the cellulosic fibre segment is seen weak by analysts amid low volume growth and weak realisations, and it will likely be a drag on the company's top line growth. The operating profit is seen falling sharply on year in the June quarter due to operating loss in its paints business, and a fall in the cellulosic fibre segment's profit. The bottom line of the company is seen getting hit by the paints segment operating loss and higher depreciation and interest costs.

 

The Aditya Birla group company will likely report a standalone net loss of INR 2.48 billion for the June quarter, according to an average of estimates by five brokerages. The company had reported a net loss of INR 2.88 billion in the trailing quarter and net loss of INR 521 million in the year-ago quarter. The net loss estimates range from INR 1.79 billion by Antique Stock Broking to INR 3.10 billion by Motilal Oswal Financial Services.

 

The standalone revenue is seen at INR 90.34 billion, up 31% on year and up 1.2% on quarter. Among the revenue estimates, the lowest is INR 88.30 billion by Motilal and the highest is INR 91.95 billion by analysts at the institutional equities division of Kotak Securities. The earnings before interest, tax, depreciation, and amortisation is estimated at INR 2.44 billion.

 

The company will announce the June quarter earnings Friday. In the March quarter, Grasim's bottom line worsened considerably. The company had reported a net loss of INR 2.88 billion compared to a net loss of INR 4.41 billion in the year ago quarter. But adjusted for tax write-backs and exceptional items, the net loss for the March quarter was INR 1.74 billion as compared to a net profit of INR 2.75 billion for the year-ago quarter. The company had reported a 32% on-year jump in its revenue to INR 89.26 billion.

 

According to Kotak, Grasim will likely report a 1% quarter-on-quarter fall in volume in the viscose staple fibre segment amid "continued weakness" in viscose filament yarn sales. Viscose staple fibre is the same as the cellulosic staple fibre and the company had recently changed the name of the segment to cellulosic fibre from viscose fibre. The brokerage, however, expects a 0.5% on-quarter "increase in volumes in chemical operations on gradual domestic demand improvement."

 

In the cellulosic fibre segment, the company had sold 207,000 tonnes of staple fibre and 11,000 tonnes of filament yarn in the March quarter. The sales volume in the year-ago June quarter was 212,000 tonnes of cellulosic staple fibre and 9,500 tonnes of cellulosic filament yarn. The caustic soda sales volume in the chemicals segment of Grasim was 290,000 tonnes in the March quarter and 282,000 tonnes in the June quarter last year.

 

Grasim's revenue from paints in the June quarter is seen significantly higher than the year ago quarter with a ramp up of production and increasing sales volume in every quarter since its entry in the paints business in March 2024. But on a quarter-on-quarter basis, the combined revenue of paints and business-to-business e-commerce business will likely be flat at around INR 22 billion in the June quarter, according to ICICI Securities. The company had commenced its B2B e-commerce operations around the same time as its paints foray.

 

Analysts see the EBITDA falling in the June quarter from the year-ago quarter due to the high operating costs in the paints business. Antique Stock Broking estimates Grasim's EBITDA will fall 17% on year "owing to weak CSF (cellulosic staple fibre) profitability."

 

Motilal Oswal sees the company's EBITDA falling around 32% on year due to a 31?ll in the cellulosic staple fibre segment EBITDA and a 12?cline in that of the chemicals segment. Kotak sees chemicals segment EBITDA increasing 4.3% on year but expects operating loss levels in the paints business to continue in the June quarter. The bottom line growth of Grasim in the June quarter will also likely be hit by high rise in interest and depreciation costs, according to Motilal.

 

After the announcement of June quarter earnings, investors will watch for management commentary on the paints business and the outlook for demand and pricing in the cellulosic fibre segment. Investors will also look out for comments on the rationale behind the company's recent complaint to the Competition Commission of India alleging anti-competitive practices by Asian Paints Ltd., which is the leader in the domestic paints industry.

 

At 1247 IST, Grasim shares traded at INR 2,730.10 on the National Stock Exchange, down 1.3%. Of the six research reports on the company available with Informist, four have a 'buy' call on the stock for an average target price of INR 3,163, one has a 'hold' recommendation, and one has a 'sell' call.

 

Following are the June quarter earnings estimates for Grasim Industries based on reports from five brokerage firms in descending order of estimate of net profit:

 

Brokerage	Net Sales	Net Profit	EBITDA
	(In INR million)
Antique Stock Broking Ltd	91,112	-1,785	2,699
Nuvama Wealth Management Ltd	90,686	-1,912	2,329
ICICI Securities Ltd	89,646	-2,538	2,548
Kotak Institutional Equities	91,950	-3,086	2,448
Motilal Oswal Financial Services Ltd	88,300	-3,100	2,200
Average	90,339	-2,484	2,445

 

End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Ashish Shirke

 

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