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Informist, Saturday, Oct. 25, 2025

 

By Narayana Krishna

 

HYDERABAD - Grasim Industries Ltd. is expected to post a modest year-on-year rise in its standalone net profit for the September quarter on the back of strong revenue growth in its core segments. Higher input costs and losses from new businesses are likely to keep overall margins under pressure.

 

Aditya Birla group's Grasim Industries' standalone operations include manufacturing of viscose staple fibre and chemicals. These two segments account for nearly 65% of the company's total revenue. The new business segments - Birla Opus paints and e-commerce operations - contribute nearly 35% of revenues.

 

The company's net profit is estimated at INR 7.9 billion, up 3% on year, while net sales are likely to rise 22% on year to INR 93.4 billion, according to the average of five brokerages' estimates. On a trailing quarter basis, the company's net sales are seen rising 1%. The company reported a net loss of INR 1.2 billion for the June quarter due to weak fibre business, higher operating costs, and investments in new business such as paints and e-commerce.

 

The highest net profit estimate for Grasim is INR 8.2 billion from Kotak Securities Ltd. and the lowest estimate is INR 7.7 billion from ICICI Securities Ltd. The revenue estimates range from a high of INR 95.5 billion by Nuvama Wealth Management Ltd. to a low of INR 91.9 billion by Kotak Securities. Grasim Industries is yet to announce the date when it will details its Jul-Sept earnings.

 

The company's fibre business is expected to see a muted performance in the September quarter due to weak demand and lower product prices. A marginal 1.5% quarter-on-quarter decline in volumes reflects subdued domestic and export demand, Kotak Securities said. On the other hand, Motilal Oswal Financial Services Ltd. sees Grasim's revenue from the VSF segment rising 3% on year, even as lower realisations weigh on profitability.

 

The chemical segment is expected to maintain steady growth momentum in the September quarter, helped by a gradual improvement in domestic demand, Kotak Securities said, even though it expects flat sequential volumes. Brokerage Motilal Oswal expects this segment's revenue to rise 1% on year.

 

Grasim's new businesses - paints and e-commerce - are expected to remain in the investment phase, keeping profitability under pressure, according to analysts. Despite contraction in the overall paints industry, Kotak expects Grasim to post marginal revenue growth and narrower losses in the paints business for the quarter.

 

Grasim is expected to report an earnings before interest, tax, depreciation, and amortisation margin of 3.5-3.8%, down from 4.3% in the year-ago quarter. The fall in the margin is mainly on account of pressure on margins in the fibre business and losses in the paints business. The average of estimates from four brokerages peg Grasim's September quarter EBITDA at INR 3.5 billion.

 

Market participants are looking for the company's commentary on Birla Opus growth and the outlook for growth in the fibre business.

 

Of the six research reports on the company available with Informist, four have a 'buy' or equivalent rating on the stock with an average target price of INR 3.255, while one has a 'hold' rating on the stock with a target price of INR 2.971 and one has a 'sell' rating with a price target of INR 2,750.

 

The stock has risen over 5.6% since the announcement of the company's June quarter earnings on Aug. 8. On Friday, the company's shares ended at INR 2,841.30 on the National Stock Exchange, down 0.8% from the previous close. 

 

Following are the Jul-Sept earnings estimates for Grasim Industries Ltd. from five brokerage firms in descending order by the estimate of net profit:

 

Brokerage	Net sales	Net profit	EBITDA
	--in million rupees--
Kotak Securities Ltd	91,918	8,234	3,484
Sharekhan Ltd	92,000	8,000	--
Nuvama Wealth Management Ltd	95,467	7,988	3,943
Motilal Oswal Financial Services Ltd	92,210	7,770	3,200
ICICI Securities Ltd	95,263	7,660	3,257
Average	93,371	7,930	3,471

 

End

 

Edited by Avishek Dutta

 

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