Grasim has announced impressive results led by robust volume growth in all its businesses viz. VSF, Chemical and Cement. For the current quarter, consolidated revenue rose by 13% at ₹ 10,001 Cr. and EBITDA at ₹ 2,059 Cr. was higher by 24%. Net profit (before EI) grew by 40% to ₹ 724 Cr. (Q4 last year: ₹ 516 Cr.).
For the full year, consolidated revenue was higher by 12% to ₹ 36,637 Cr. Consolidated EBITDA was up by 24% at ₹ 7,025 Cr. and Net profit increased to ₹ 2,387 Cr. compared to ₹ 1,753 Cr. last year.
(Before Exceptional Item)
The Board of Directors of Grasim has recommended a higher dividend of ₹ 22.5 per share as against ₹ 18 per share in the previous year. The total outflow on account of the dividend would be ₹ 221 Cr. (inclusive of the corporate tax on dividend).
Viscose Staple Fibre (VSF)
Globally, VSF prices witnessed a recovery post the Chinese New Year on the back of better demand.
The business revenue increased by 23% at ₹ 1,729 Cr. Sales volume grew by 10% at 130K TPA helped by additional volume from Vilayat plant and concerted efforts towards market expansion. Business EBITDA for the quarter was ₹ 267 Cr.
Pulp JVs recorded better results with higher pulp realization in the international market and favorable exchange rate.
The revenue more than doubled at ₹ 957 Cr. as against ₹ 429 Cr. in Q4FY15. Caustic Soda volume at 204K Tons was up by 95%. Volumes in existing operations grew by 15%. Additionally, merger of ABCIL contributed 84K Tons. The uptick in ECU realisations coupled with lower energy cost resulted in higher EBITDA, rising from ₹ 55 Cr. to ₹ 229 Cr. On a like for like basis, EBITDA was up by 156% at ₹ 140 Cr.
The Board approved ₹ 513 Cr. for brownfield expansion of Caustic soda capacity at Vilayat plant from 219K TPA to 363K TPA along with a Captive Power plant of 44 MW. The expansion is expected to be completed in around 24 month’s time. On completion of the proposed expansion and debottlenecking of capacity at various plants, Caustic capacity will increase from 804K TPA currently to 1,048K TPA.
Cement Subsidiary (UltraTech Cement)
The Cement sector displayed signs of recovery with demand growth for the industry estimated at ~11.5% for the current quarter. UltraTech outpaced the industry with domestic volume growth of 15%. Revenue for the quarter was ₹ 6,920 Cr. vis-à-vis ₹ 6,595 Cr. in Q4 last year. EBITDA was up by 3% at ₹ 1,478 Cr. helped by enhanced volumes and lower fuel prices. Net profit was ₹ 723 Cr. compared to ₹ 657 Cr. in the corresponding quarter.
In VSF, the capacity additions have slowed down globally. Further, Cotton production is projected to be lower than the consumption in Season 15-16 with the reduced acreage and unfavorable climate. As a result, the price volatility of VSF is expected to reduce.
The Company will continue to focus on expanding VSF market in India by partnering with the textile value chain and better customer connect through Brand Liva. Enhancing product mix through larger share of specialty fibre will be yet another focus area.
The caustic demand in India is expected to grow with increase demand from the end user industry. To meet the growing demand, caustic capacity is being raised by 100K TPA through debottlenecking at different units.
In Cement, demand is expected to grow at 7% – 8% for the next year, driven by the Government’s focus on infrastructure development, housing, smart cities etc. The Company is well positioned across the country to cater the growth in demand.
Grasim is well poised to reap the benefits of the investment in capacity expansion and acquisitions with the expected upturn in the economy.
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