Grasim Industries Q3 Results: Net Profit Falls 41% to ₹899 Crore, Revenue Rises 9% to ₹34,793 Crore
Grasim Industries, a leading diversified conglomerate under the Aditya Birla Group, reported its financial results for the third quarter of FY24 on Monday. The company posted a significant 41% year-on-year (YoY) decline in consolidated net profit, which stood at ₹899 crore. However, revenue from operations saw a 9% YoY increase to ₹34,793 crore, driven by growth in its chemicals and building materials businesses.
Profitability Impacted by Rising Costs
Despite revenue growth, the steep drop in profit was attributed to higher interest and depreciation expenses, mainly due to investments in the building materials sector. Additionally, consolidated EBITDA declined by 9% YoY to ₹4,668 crore, affected by lower realizations in the cement business and initial investments in the consumer-focused paints segment.
Segment-Wise Performance
1. Cellulosic Fibres (Viscose) Business
The cellulosic fibres segment registered a 6% YoY revenue growth, reaching ₹3,934 crore. However, EBITDA for the segment dropped 18% YoY to ₹331 crore due to increased input costs.
- CSF (Cellulosic Staple Fibre) prices remained stable at $1.65/kg during Q3FY24, supported by steady demand from China.
- Sales volume stood at 205 KT, unchanged from the previous quarter, due to production disruptions at the Excel Plant in Kharach and seasonally weaker demand towards the quarter’s end.
- The Continuous Filament Yarn (CFY) business grew 10% YoY in volume, but realizations faced pressure due to cheaper imports from China.
2. Chemicals Business
Grasim’s chemicals business saw a strong performance in Q3FY24, with revenue increasing 12% YoY to ₹2,226 crore and EBITDA growing 25% YoY to ₹329 crore. The growth was driven by:
- Improved caustic soda realizations
- Higher profitability in the chlorine derivatives segment
Despite an oversupply of chlorine, which led to negative realizations, ECU (Electrochemical Unit) realizations grew 8% YoY to ₹34,041/ton. However, caustic soda sales volume increased only 1% YoY due to lower power availability, which constrained production at the Vilayat plant.
3. Building Materials (Cement & Paints) Business
The building materials segment, which includes UltraTech Cement and the newly launched Birla Opus and Birla Pivot, recorded a 10% YoY revenue growth to ₹18,784 crore.
However, EBITDA for the segment fell to ₹2,806 crore, impacted by:
- Lower realizations in UltraTech Cement
- Initial investments in Birla Opus, the new decorative paints brand
Expansion Plans in Specialty Fibres
Grasim’s Board of Directors approved a major expansion plan to increase its Lyocell capacity by 110K TPA at its Harihar, Karnataka facility. The first phase of 55K TPA is expected to be completed by mid-2027, with an investment of ₹1,350 crore.
This move aligns with Grasim’s strategy to expand its eco-friendly specialty fibre portfolio under the ‘Birla Excel’ brand, bringing the company’s total Lyocell capacity to 153K TPA.
Key Financial Ratios & Market Overview
| Financial Metric | Value |
|---|---|
| Market Cap | ₹1,66,290 Cr. |
| Current Price | ₹2,525 |
| 52-Week High/Low | ₹2,878 / ₹2,028 |
| Stock P/E | 40.8 |
| Book Value | ₹1,411 |
| Dividend Yield | 0.40% |
| ROCE (Return on Capital Employed) | 9.30% |
| ROE (Return on Equity) | 6.90% |
| Face Value | ₹2.00 |
| Debt to Equity Ratio | 1.70 |
| Industry P/E | 25.4 |
| Total Debt | ₹1,58,159 Cr. |
| PEG Ratio | 2.27 |
| Intrinsic Value | ₹1,304 |
| Graham Number | ₹1,365 |
| Piotroski Score | 4.00 |
| Price to Book Value | 1.82 |
| Number of Equity Shares | 65.8 Cr. |
| ROIC (Return on Invested Capital) | 13.9% |
Outlook & Conclusion
Despite strong revenue growth, Grasim’s profitability was impacted by higher costs and investment-related expenses. The company remains optimistic about its long-term growth strategy, focusing on expanding its building materials and specialty fibres businesses.
With UltraTech Cement, Birla Opus (paints), and chemicals divisions showing positive momentum, Grasim is well-positioned for future growth. However, margin pressures from the cement business and rising debt levels remain key concerns for investors.
Going forward, Grasim’s aggressive expansion plans in Lyocell fibres and paints will be closely watched. Investors will also monitor how commodity prices, demand trends, and interest rates impact the company’s performance in the coming quarters.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.