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Grasim Industries Q1 Preview | Higher volumes, realisations in VSF and chemicals business to push PAT


Grasim Industries Limited (Grasim) is likely to report a robust year-on-year (YoY) growth of ~40 percent in its standalone profit after tax (PAT) when it will declare its results on August 12 for the quarter ended June 2022. The standalone revenues for the company are likely to grow 78 percent on-year.

Sequentially, the performance of the company is likely to be muted with PAT witnessing a decline of 24 percent quarter-on-quarter (QoQ) and revenues up a marginal 5 percent.

According to a poll of brokerages conducted by Moneycontrol, the flagship company of the Aditya Birla Group is forecast to report a standalone PAT of Rs 620 crore for the quarter and standalone revenues of Rs 6,704 crore.

The company had recorded a standalone PAT of Rs 446 crore during the corresponding period of the previous year on revenues of Rs 3,763 crore.

During the January-March period, the standalone PAT for the quarter stood at Rs 814 crore on revenues of Rs 6,376 crore.

Growth for the company is driven by strong YoY growth in volumes of its VSF business and robust performance of its chemicals operations. Better realisations in both businesses also aided the YoY growth for the company.

“We model a 59 percent YoY volume increase in VSF operations (flat QoQ) to 191,000 tonnes and a 15 percent YoY volume increase in the chemical operations (flat QoQ) to 273,000 tonnes on improved export demand,” said a report from Kotak Institutional Equities.

Brokerage firm Motilal Oswal Financial Services expects revenue for the VSF business to grow by 93 percent, driven by 15 percent YoY growth in realisation. It forecast revenue of the chemical segment to grow by 75 percent on-year, driven by a 48 percent YoY growth in realisation.

Grasim is likely to post a robust 47 percent YoY jump in standalone EBITDA to Rs 1,093 crore on the back of strong profitability in the chemicals division and better margins in VSF, along with ramp-up of new capacities.

Margins are likely to be squeezed due to higher operating costs. Motilal Oswal expects EBITDA/kg of Rs 26 for the VSF segment v/s Rs 40 in Q1FY22 and margin for the chemicals segment to improve by 4.8 percent YoY and 3.9 percent on-quarter.

Grasim closed Rs 10.85 lower at Rs 1,600.05 on August 11 on the National Stock Exchange. The stock has appreciated 6.5 percent over the past one year and has generated returns of 13.8 percent over the past one month.

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