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Stock Market View | Parth Shah, Research Analyst, Stoxbox on Grasim
Grasim Industries Ltd., a part of the Aditya Birla conglomerate, saw a steep decline in its net profit on an annual basis for the quarter that ended December 2023, owing to a one-off event in Q3FY23. On a consolidated basis, Grasim Industries Ltd. saw an uptick in the comparable annual EBITDA, driven by robust performance by the cement and financial services business. On a standalone basis, despite subdued global demand and lower product prices, the viscose segment reported a 34% increase in its sales demand on a YoY basis at 205KT. However, the viscose filament yarn business margins declined due to lower sales volume and realizations on account of increasing imports from China. The specialty chemicals business recorded a volume growth of 5% YoY, though it remained flat on a QoQ basis despite subdued chemical prices during the quarter. Regarding the paints business “Opus”, trial production has started at three factories. Also, the supply chain logistics, and distribution network have been set up for the launch of the paints business in the current quarter. Regarding the capex spent during the quarter, a majority of the capex was spent on the paints business for establishing new capacities. The financial business of the company saw an increase in the AUM by 13% on an annual basis, majorly due to the growth in its lending portfolio. Going forward, various factors such as housing demand, urbanization, and premiumization are going to provide a boost to the upcoming paints business. However, due to the peer pressure from the incumbent decorative paint business, the company would primarily have to optimize its distribution network and delivery time in order to compete with them. On a standalone basis, the cement and the financial segment are poised to deliver better results in the upcoming quarter. However, a close watch is to be kept on how the company executes its maiden steps into the paints business.
