Grasim Inds Ltd. Q4FY21 - Earning Analysis | Globe Capital Market LTD.
Grasim Inds Ltd. Q4FY21 – Earning Analysis

At the CMP of Rs. 1371, the stock is trading at full year P/E multiple of 21.8 times with the full year EPS of Rs 62.88 per share.

Q4 FY21 Overview and Verdict
Rs. 1371
Higher than estimates

At the CMP of Rs. 1371, the stock is trading at full year P/E multiple of 21.8 times with the full year EPS of Rs 62.88 per share.

The Company’s consolidated net profit for the March quarter rose 13.30% to Rs 2,616.64 crore from Rs 2,309.41 crore in the same quarter last year.

The total revenue from operations jumped to Rs 24,398.92 crore from Rs 19,349.54 crore in the corresponding quarter last year, registering a gain of 26%.

Ebitda for the quarter surged 62% YoY to Rs 5,142 crore.

The board of Directors of Grasim has recommended a dividend of Rs 5/- and a special dividend of Rs 4/- for the year ended March 2021, taking the total dividend to Rs 9/-.

Management Takeaways:

The management said for its viscose business, the buoyancy in the domestic demand was reflected in 9% YoY growth in the domestic sales, while its chemical business, especially the advanced material (epoxy) sales volume growth was driven by demand across segments, especially from the wind and auto segment.

The sector witnessed demand outstripping the supply due to raw material constraint, coupled with disruption at certain global manufacturers.

Paint Segment

The Company added that its paint business is making brisk progress in line with the plans. The company has recently forayed into the paints business with a capital of Rs 5,000 crore for three years. The company is in the process of hiring senior professionals and specialists for the business. It is also actively engaged in shortlisting/acquiring land for plant locations and is progressing with the engineering planning for the project.

The company’s chemical business makes domestic caustic soda business and advanced material business. The caustic soda capacity utilisation improved to 94% in Q4FY21 from 89% in Q3FY21. International caustic soda prices improved sequentially led by temporary supply disruptions in the later part of the quarter.

The total Capex spend for FY21 stood at Rs 1,508 Cr. The Capexplan for FY22 (excluding paints and fertiliser) is Rs 2,604 Cr. which includes the VSF expansion project at Vilayat with Line-1 scheduled to be commissioned in Q2FY22 and Line-2 in Q3FY22.

Its Capex plans also include investment towards increasing its Advanced Materials (Epoxy) business capacity by ~125 KTPA through a brownfield expansion at the existing location of Vilayat.

In the Chlor-Alkali business, Grasim plans investment in a ~200TPD Caustic brownfield expansion at Vilayat, Gujarat. This would take the total capacity to ~1,400 TPD at its Vilayat site and will primarily meet the customer requirements in the country’s West Region. The expansion will be commissioned in 24 months post receipt of statutory clearances/approvals.

Its fertiliser Business divestment process is expected to be completed by Q2FY22 after receipt of NCLT approvals for the Scheme of Arrangement amongst other pending approvals.

Revenue and EBITDA from the discontinued operations (Fertiliser Business) for Q4FY21 stood at Rs 560.96 crore and Rs 33.16 crore respectively which is not included in the financials.


Globe Capital Market Limited (“GCML”) is a Stock Broker registered with BSE, NSE and MSEI in all the major segments viz. Capital, F & O and CDS segments. GCML is also a Depository Participant and registered with both the Depositories viz. CDSL and NSDL. Further, GCML is a SEBI registered Portfolio Manager. GCML includes subsidiaries, group and associate companies, promoters, directors, employees and affiliates.

Globe Commodities Limited, Globe Derivatives and Securities Limited & Globe Fincap Limited are subsidiaries of GCML. Rolex Finvest Private Limited, A to Z Consultants Private Limited, A to Z Venture Capital Limited, M. Agarwal Stock Brokers Private Limited, A M Share Brokers Private Limited, Shri Adinath Advertising Company Pvt. Ltd., Orient Land base Private Limited, Bolt Synthetic Private Limited, Price ponder Private Limited and Lakshya Impex Private Limited  are associates of GCML. Globe Comex International DMCC is step down subsidiary of GCML.

This report has been prepared by GCML and published in accordance with the provisions of Regulation 19 of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014, for use by the recipient as information only and is not for general circulation or public distribution. This report is not to be altered, transmitted, reproduced, copied, redistributed, uploaded, published or made available to others, in any form, in whole or in part, for any purpose without prior written permission from GCML. The projections and the forecasts described in this report are based on estimates and assumptions and are inherently subject to significant uncertainties and contingencies. Projections and forecasts are necessarily speculative in nature, and it can be expected that one or more of the estimates on which the projections are forecasts were based may not materialize or may vary significantly from actual results and such variations will likely increase over the period of time. This report should not be construed as an offer to sell or the solicitation of an offer to buy, purchase or subscribe to any securities, and neither this report nor anything contained therein shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. It does not constitute a personal recommendation or take into account the particular investment objective, financial situation or needs of any individual in particular. The research analysts of GCML have adhered to the code of conduct under Regulation 24 (2) of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014. The recipients of this report must make their own investment decisions, based on their own investment objectives, financial situation or needs and other factors. The recipients should consider and independently evaluate whether it is suitable for its/ his/ her/their particular circumstances and if necessary, seek professional / financial advice as there is substantial risk of loss. GCML does not take any responsibility thereof.

Any such recipient shall be responsible for conducting his/her/its/their own investigation and analysis of the information contained or referred to in this report and of evaluating the merits and risks involved in securities forming the subject matter of this report. The price and value of the investment referred to in this report and income from them may go up as well as down, and investors may realize profit/loss on their investments. Past performance is not a guide for future performance. Actual results may differ materially from those set forth in the projection.

This report has been prepared by GCML based on the information available in the public domain and other public sources believed to be reliable. Though utmost care has been taken to ensure its accuracy and completeness, no representation or warranty, express or implied is made by GCML that such information is accurate or complete and/or is independently verified. The contents of this report represent the assumptions and projections of GCML and GCML does not guarantee the accuracy or reliability of any projection, assurances or advice made herein. Nothing in this report constitutes investment, legal, accounting and/or tax advice or a representation that any investment or strategy is suitable or appropriate to recipients’ specific circumstances.

Since GCML or its associates are engaged in various financial activities, they might have financial interest or beneficial ownership in various companies including subject company/companies mentioned in the report. GCML or its associates have not received any compensation for investment banking or merchant banking from the subject company in the past 12 months.  GCML or its associates might have received any compensation including brokerage services and for products or services other than investment banking or merchant banking from the subject company in the past 12 months. It is confirmed that GCML or research analyst or its associates have not managed or co-managed public offering of securities for the subject company in the past 12 months.

Research analyst or GCML or its relatives’/associates’ have no material conflict of interest at the time of publication of this report. Neither research analyst nor GCML are engaged in market making activity for the subject company. It is confirmed that research analysts do not serve as an officer, director or employee of the subject company. It is also confirmed that research analyst have not received any compensation from the subject company in the past 12 months.

No material disciplinary action has been taken on GCML by any regulatory authority impacting Equity Research Analysis activities.

The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. This information is subject to change, as per applicable law, without any prior notice. GCML reserves the right to make modifications and alternations to this statement, as may be required, from time to time.

Research analyst or GCML or its relatives’/associates’ do not have actual/beneficial ownership of 1% or more in securities of the subject company, at the end of the month immediately preceding the date of publication of the document.