Grasim Industries stock in focus ahead of Q2 results; double-digit growth seen in profit, revenue

Grasim reported a loss of Rs 52.12 crore, despite a revenue increase of 11% YoY, reaching Rs 6,894 crore in Q1FY25.

Shares of Grasim Industries are in focus on November 14 as the company is anticipated to post solid revenue and profit growth for the quarter ended September 30, 2024. The flagship Aditya Birla Group firm is slated to report its Q2FY25 earnings later in the day.

Grasim's revenue from operations could see a year-on-year (YoY) rise of 17-20%, with net profit likely rising 18% YoY, according to estimates from three brokerages. For individual segments, projections indicate a 2% YoY revenue increase in the VSF segment, while the chemicals segment is expected to grow by 5% YoY.

Nuvama Institutional Equities noted that Grasim's VSF segment is benefiting from improved realizations, but new ventures in paints and B2B are impacting overall margins.

For the VSF segment, Motilal Oswal estimates EBITDA growth of 1% YoY, with operating margins (OPM) steady at 12% YoY. The Chemical segment's EBITDA is expected to rise by 33% YoY, pushing operating margins (OPM) up by 3.3 percentage points to 15.2%.

The brokerage sees standalone EBITDA to decline 34% YoY to Rs 390 crore, with OPM anticipated to fall by 4 percentage points to 5.2%. Additionally, interest and depreciation costs are expected to rise by 39% and 23% YoY, respectively, with an adjusted profit increase of 16% YoY to Rs 920 crore.

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Kotak Equities also expects a sequential decrease in VSF volumes due to continued softness in VFY, whereas the chemical segment could see a 10% QoQ rise in volume, reflecting a gradual recovery in domestic demand.

Grasim’s standalone EBITDA is estimated at Rs 540 crore, with VSF EBITDA at Rs 510 crore (up 9% YoY and 26% QoQ) on price improvements, chemicals EBITDA at Rs 310 crore (up 30% YoY, down 1.2% QoQ) on demand recovery, and continued losses in the paints division as ramp-up efforts progress.

In the previous quarter, Grasim reported a loss of Rs 52.12 crore, despite a revenue increase of 11% YoY, reaching Rs 6,894 crore.

Grasim Industries shares ended marginally higher at Rs 2,530 on the National Stock Exchange (NSE) in the previous session. The stock has rallied 19% this year, outperforming Nifty's 8% gain. Over the past 12 months, the stock has risen 30%, while Nifty rose 19% during the same period