Grasim Industries Ltd on February 14 reported a consolidated profit after tax (PAT) of Rs 1,746 crore for the third quarter ended December 2021. This was up by 26 percent from Rs 1,389 crore reported in the corresponding quarter last year.
The profit stands higher by 28 percent from Rs 1,359 crore reported in the previous quarter of this fiscal year.
The Aditya Birla Group company reported consolidated revenues of Rs 24,402 crore, posting 16 percent rise over the Rs 21,000 crore topline a year back. On a sequential basis, the revenue climbed 8 percent from Rs 22,567 crore clocked in the previous quarter.
Grasim's VSF and chemicals business registered higher realisations and volumes which aided the growth in performance compared to last year.
Business Performance
Viscose Business
The revenues from the viscose business grew 55 percent on year and 11 percent on quarter to Rs 3,335 crore.
“The growth in the global demand for textile products in the US and Europe led to a positive demand environment for VSF (viscose fiber)," the company said in its release. The VSF prices averaged higher in Q3FY22 compared to the previous quarter, though, towards the end of December-21, the realization started to trend downwards due to COVID concerns.
The company commissioned its brownfield expansion of 300 TPD (tons per day) of VSF at Vilayat in Gujarat, which aided the sales volume during the quarter.
The VSF sales volume increased by 11 percent on year and 2 percent on quarter to 157 KT (kilo tons) while that of VFY (Viscose filament yarn) increased by 13 percent on year and 8 percent on quarter to 13 KT.
The share of value-added products in the overall sales mix increased to 29%.
Higher sales volume, better product mix and increase in realisation could not fully offset the unprecedented increase in the input costs in VSF. The cost of pulp, caustic soda, coal and others increased by Rs 412 crore QoQ.
EBITDA (earnings before interest, tax, depreciation and amortization) for the business declined by 17 percent on year and 31 percent on quarter to Rs 401 crore.
Chemicals Business
The sale of caustic soda increased by 8 percent on year and 10 percent on quarter to 279 KT. The capacity utilization of caustic soda business was at all time high of 93 percent, an increase of 7 percent from the previous quarter.
The revenues from the chemicals business jumped 83 percent on year and 44 percent quarter to Rs 2,338 crore.
EBITDA for the overall chemicals business witnessed a steep jump of 198 percent on year and 127 percent on quarter to Rs 528 crore. This was aided by higher capacity utilization of caustic soda business and strong operational performance by the Chlor-Alkali business.
“Chlor Alkali business is on the path to increase the share of green power to 10% (FY23) from 3.4% (9MFY22) in the overall power mix which will lead to reduction of carbon emissions and cost competitiveness”, said the company.
Cement Business - UltraTech
Consolidated revenue for the cement business was up by 6 percent on year to Rs 12,985 crore. However, the increase in input costs dented the margins of the business.
Energy cost rose 39 percent on year; logistics cost increased 4 percent on year while raw material cost gained 7 percent. This resulted in a YoY decline of 26 percent in consolidated EBITDA, which stood at Rs 2,490 crore compared to Rs 3,362 in the same period a year ago.
Grey Cement capacity increased to 114.55 MTPA (million tons per annum) post commissioning of 0.6 MTPA each at Patliputra (Bihar) and Dankuni (West Bengal) and 2 MTPA at Bara (UP).
White cement modernization and capacity expansion from 6.5 LTPA to 12.53LTPA was done at a cost of Rs 965 crore.
Financial Services Business
Consolidated revenues for Aditya Birla Capital Limited (ABCL) was higher by 13 percent on year at Rs 5,706 crore. The profit after minority interest doubled compared to last year to Rs 577 crore as it included a net gain of Rs 161 crore from sale of ~ 1 percent stake in the AMC business, through its IPO in October 2021.
The net interest margin (incl. fee income) for NBFC business was up 100 bps YoY to 6.24 percent during the current quarter. This was led by growth in retail/SME segments & lower cost of borrowing; The Net Interest Income rose 30 percent YoY to Rs 799 crore.
The domestic AAUM (average assets under management) increased to Rs 2,98,763 crore, up 17 percent YoY.
In Life Insurance, individual first year premium (FYP) grew 17 percent YoY to Rs 635 crore. Total Premium during the quarter grew 21 percent on year to Rs 3,145 crore.
Other Businesses
Revenue from other business, which include the textiles and insulators business, grew 45 percent on year to Rs 566 crore while the EBITDA for the business jumped 300 percent from Rs 11 crore to Rs 44 crore.
Margins
The consolidated EBITDA for the company stood at Rs 4,107 crore, declining by 8 percent on year from Rs 4,476 crore in the same period a year ago.
Consequently, the EBITDA margins witnessed a decline of 400 bps from 21 percent last year to 17 percent during the reported quarter.
Grasim Industries closed at Rs 1,642.95, down Rs 67.2 (-3.93%) from its previous close at the National Stock Exchange on February 14. The stock has generated returns of 32 percent in the past one year.
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