Grasim Q3 net improves 26% to Rs 1,746 crore as chemicals business shows strong margins

The company reported a consolidated profit of Rs 1,746 crore attributable to owners, up 26% year-on-year.

However, consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) declined 4% to Rs 3,985 crore as margins narrowed at cement subsidiary Ultratech due to high input costs. EBITDA margin narrowed 336 basis points to 16.3%.

The company, which has interests across fibre, chemicals, cement and financial services, reported a consolidated top-line of Rs 24,402 crore, up 16% on-year.

The stock fell 3.92% to close at Rs 1,643.2 on the BSE on Monday compared with a 3% dip in the benchmark Sensex.

The company achieved zero debt on a standalone basis at the end of the quarter after it divested from its fertilisers business.

There was a growth in global demand for Viscose Staple Fibre (VSF) as demand for textile products in the US and Europe inched up, the company said. There was a strong demand for textiles in India too. The company commissioned 300 tons-per-day brownfield manufacturing capacity at its plant at Vilayat during the quarter.

The viscose business reported revenues of Rs 3,335 crore during the quarter, up 55% y-o-y. EBITDA declined by 17% to Rs 401 crore, as per a presentation from the company.

The chemicals business saw an 83% increase in revenue to Rs 2,338 crore and EBITDA tripled to Rs 528 crore as caustic soda prices increased for the fourth consecutive quarter.

Grasim also plans to enter the paints business and has committed to invest Rs 5,000 crore for the same. The company received environmental clearance for two of its plant sites at Panipat and Ludhiana of the five sites that it plans to set up.

On a standalone basis, the company reported a 46% growth in its profit to Rs 522 crore. EBITDA improved 43% to Rs 922 crore but EBITDA margin narrowed by 151 basis points to 15.9%. Standalone revenue climbed 56% to Rs 5,785 crore.