MOSL: GRASIM INDUSTRIES (Neutral)-Miss on margins led by weak VSF and Chemical profitability
GRASIM INDUSTRIES: Miss on margins led by weak VSF and Chemical profitability
(GRASIM IN, Mkt Cap USD6.7b, CMP INR734, TP INR740, 1% Upside, Neutral)
- 2QFY20 standalone revenue declined 6% YoY to INR48b (in-line). EBITDA declined 38% YoY to INR6.6b (v/s est. INR9.1b); margins contracted 7pp YoY to 13.7%. Adj. PAT was down 36% YoY to INR5.3b (in-line).
- VSF segment: Volumes increased 3% YoY with revenues down 7% YoY to INR24b; EBITDA declined 34% YoY to INR3.8b due to fall in domestic realization. VSF margins declined 6.4pp YoY to 15.7%.
- Chemical segment: Volumes decreased 7% YoY for the quarter. Chemical revenue stood at INR13.5b (-16%YoY). EBITDA declined 40% YoY to INR2.7b; margins declined 8pp YoY to 20.3% as ECU realizations were impacted by sharp decline in realizations.
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.
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