Grasim (Standalone) reported a strong set of numbers for the quarter beating estimates on all fronts (adjusted for the one-time exceptional item). Revenue for the quarter was up 26.1% yoy to Rs5,118.5cr, ~5% ahead of consensus estimates. EBITDA grew 35.4% yoy to Rs1,070.5cr (~8% ahead of the estimate), with a 144bps expansion in EBITDA margin, which stood at 20.9%. Company reported a one-time loss of Rs2,283.4cr on account of fair valuation of its investment in Vodafone Idea Ltd. Adjusted to the same, Adj. PAT was up 30% yoy to Rs816.7cr, ~20% ahead of the estimates.
During the quarter, company's holding in Idea Cellular Limited (Idea) has been reduced from 23.1% to 11.6% consequent to the merger of Vodafone India Limited and Vodafone Mobile Services Limited with Idea Cellular Limited effective from August 31, 2018 and the merged entity has been named as Vodafone Idea Limited (VIL). Consequent to reduction of the holding of the Company in VIL, it has ceased to be an associate of the company and is considered as a financial investment under IND AS 109 w.e.f. August 31, 2018. The difference in the book value and fair value of the investment amounting to Rs2,283.4cr has been reported as one-time loss in the P&L.
The results of the current period are not comparable with that of the previous year as the previous year’s results do not include the results of the Viscose Filament Yarn (VFY) Business of Century Textiles and Industries Ltd. (CTIL) and erstwhile Aditya Birla Nuvo Limited (ABNL).
Consolidated revenue and EBITDA were up 23.8% and 8.1% on yoy basis.
The VSF business reported net revenue of Rs2,605.8cr, up 22.9% yoy with EBITDA at Rs576cr, up 23% yoy. The VSF business reported sales volume of 136KT, up 4% yoy in Q2FY19, led by a growth in the domestic market. The share of domestic sales volume in the overall sales volume improved to 84% in Q2FY19 from 70% in Q2FY18.
Chemical segment’s net revenue for the quarter grew 38.1% yoy to Rs1,612.4cr with a 60% yoy jump in EBITDA to Rs456cr. The strong growth was driven by better realization and higher sales volume (17% yoy growth to 258KT). The phosphoric acid plant of 29KTPA at Vilayat (Gujarat) has been commissioned, taking the total capacity of the company to 54KTPA.
Pulp segment’s revenue was up 11% yoy to Rs1,304cr, however, EBITDA declined by 26% yoy to Rs124cr on account of rise in input costs.
UltraTech had reported an increase of 20% yoy in consolidated sales to Rs8,151cr driven by 20.6% volume growth. However, on account of higher input costs, EBITDA declined by 8.3% yoy.
ABCL reported a robust financial performance in Q2FY19 with a consolidated revenue of Rs3,590cr and PAT (after minority interest) of Rs195cr. The lending book (including housing) grew 30% yoy to Rs57,945cr in Q2FY19 and AUM grew 11% yoy to Rs2,71,556cr.
Company has a total planned capex of ~Rs7,500cr (at standalone level) for raising capacities in both the VSF and chemical businesses, apart from maintenance capex at various plants over FY19-21E.
Grasim Industries Ltd is currently trading at Rs. 875, down by 2.3 points or 0.26% from its previous closing of Rs. 877.30 on the BSE.
The scrip opened at Rs. 885 and has touched a high and low of Rs. 891.20 and Rs. 868.60 respectively. So far 11,91,399 (NSE+BSE) shares were traded on the counter. The stock is currently trading above its 200 DMA.
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