MOSL: GRASIM INDUSTRIES (Neutral)-Margin improvement in VSF and Chemical segments
​Grasim Industries: Margin improvement in VSF and Chemical segments; YoY/QoQ numbers not comparable due to merger of ABNL
(GRASIM IN, Mkt Cap USD12.2b, CMP INR1209, TP INR1302, 8% Upside, Neutral)
- Strong realization drives profits: In 2QFY18, standalone revenue stood at INR40.37b, EBITDA at INR7.85b and PAT at INR6.14b. Realization improved YoY in the VSF and Chemical segments. Tax rate stood at 27.4% v/s 22.2% in the corresponding period last year. VFY EBITDA contribution was ~INR610m for 2QFY18 (earlier part of the ABNL business).
- VSF – realization uptick drives profits: Volumes increased 5% YoY on a like-to-like basis due to inventory restocking by the domestic value chain. Realization rose 5% YoY, driven by higher global VSF prices. Realization was weaker QoQ due to the impact of GST. VSF margin stood at 22% (+3pp QoQ, flat YoY), led by better realization. The lagged effect of softening pulp prices should be seen in 2HFY18.
- Chemical segment – realizations up 19% YoY: Volumes rose 7% YoY on a like-to-like basis. ECU realizations increased 19% YoY, led by higher caustic prices, partially offset by negative chlorine realization. Chemical revenue stood at INR11.68b, with margins of 24.4% (+1.2pp YoY, +1.9pp QoQ). Margins were impacted by an increase in power cost.
Grasim Industries Limited is a holding company. The Company's segments include Viscose Staple Fibre and Wood Pulp; Cement, which includes Grey, White and Allied Products; Chemicals, which includes Caustic Soda and Allied Chemicals, and Others, which includes textiles. Its products include viscose staple fibre, rayon grade pulp, grey cement, white cement and textiles. The Company conducts its cement business through its subsidiary, UltraTech Cement Limited. Viscose Staple Fibre is used in apparels, home textiles, dress material, knitted wear and non-woven applications, and its plants are located at Nagda in Madhya Pradesh, Kharach and Vilayat in Gujarat and Harihar in Karnataka, with an aggregate capacity of over 500 kilo-tons per annum. It also offers fabrics and synthetic yarns through its subsidiary, Grasim Bhiwani Textiles Limited. It caters to international fashion houses in the United States and the United Kingdom supplying fabric to them for manufacturing of garments.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.