Grasim Industries Q3 net profit rises 48% on robust demand

Aditya Birla Group-owned Grasim Industries reported consolidated net profit for the quarter ended December 31, 2023 at Rs 1514 crore, registering a growth of 48 percent, helped by strong demand for the building material amid heavy infrastructure spending. The company had posted net profit of Rs 1024 crore in the same quarter last year.

Consolidated revenue came in at Rs 31,965 crore, up 11.6 percent from Rs 28,638  crore in the corresponding quarter last fiscal, Grasim Industries  said in an exchange notification.

Standalone revenue stood at Rs 6,400 crore and EBITDA at Rs 643 crore, up by 3.2 percent and 11 percent YoY, respectively. "Lower realisations in Caustic Soda business impacted the overall standalone performance," Grasim said.

Cement sales are likely to rise amid increased government spending on infrastructure, rural development and rising demand from the housing sector. India’s cement demand is expected to grow by 6 percent to 8 percent over the next few years, Fitch Ratings said in a report in September 2023.

Demand for cement slowed in December due to elections in four states, flooding in some southern states and a ban on construction to curb air pollution. Although the prices dipped in the October-December quarter, lower fuel and raw material prices helped the cement maker to protect margins.

Last month, Aditya Birla-owned UltraTech Cement  posted a  a 67 percent surge in net profit in the third quarter of FY24, beating expectations, riding on the back of robust demand for the building materials and lower operating costs.

Grasim's capex for the quarter stood at Rs 1,425 crore, of which Rs 1,088 crore was for the paints business.

Viscose Business

Viscose business reported revenue of Rs 3,715 crore and EBITDA of Rs 402 crore for Q3FY24 up 17% and 535% YoY respectively, though sequentially down by 4% and 14% respectively.  EBITDA margins improved YoY on the back of higher sales volume and a reduction in input prices.

"China VSF Inventory levels have reduced to 10 days in Q3FY24 compared to 12 days in the previous quarter reflecting a marginal increase in demand. However global demand remained weak from the major consuming markets in US/Europe leading to decrease in prices of the fibre basket," the company said.

Chemicals Business

Revenue at its second-largest segment, the chemicals business, came at Rs 1,996 crore, was flat on QoQ basis and down 23% YoY.  EBITDA for the quarter was up 12% QoQ to Rs 264 crore (down 46% YoY) on the back of improved performance of chlorine derivatives business.

Caustic Soda spot prices improved to ~$488/ton in Oct’23 but the quarter exit prices were at ~$423/ton, the company said.

In the second quarter, Grasim's results took a hit amid declining prices in the chemicals business. The company noted oversupply in the domestic market of caustic soda and lower realisations in line with sharp decline in global prices impacted the overall standalone performance.