Grasim Q3 Result Signals Buoyant Trend

Company Performance

Grasim Q3 Result Signals Buoyant Trend

Grasim has announced results for the quarter ended 31^st December, 2017 reporting significant growth both at Standalone and Consolidated levels. Standalone PAT for the quarter at INR 474 Cr. was up by 43% compared to INR 331 Cr. in Q3FY17.

Consolidated PAT, before share in profit/loss of JVs & Associates and minority interest, at INR 1,125 Cr., grew by 22% YoY. Reported consolidated PAT (including share in profit/loss of JVs & Associates and after minority interest) for the quarter at INR 543 Cr. is lower compared to Q3FY17 (INR 717 Cr.), mainly on account of share of the Company in the Net Loss of Idea Cellular Limited, an Associate of the Company.

The previous year’s financial results do not include the results of the erstwhile Aditya Birla Nuvo Limited (ABNL) as ABNL merged with the Company with effect from 1^st July, 2017, hence not comparable.

Viscose Business

The domestic VSF market demand remained buoyant with sales volume up by 9% YoY in Q3FY18. Net Revenue is up 24% YoY to INR 2,186 Cr. for Q3FY18 on the back of higher volumes and better realization. EBITDA at INR 462 Cr. is up 15% YoY in Q3FY18.

To tap the strong demand growth of VSF and maintain its leadership position, Grasim has committed a fresh capex of INR 3,523 Cr. for capacity expansion. Coupled with the existing expansion plan at a cost of INR 802 Cr., the total capacity will increase by 58% to 788 KTPA.

Pursuant to the agreement for the ‘Right to Manage & Operate’ VFY business of Century Textiles & Industries Ltd. for a period of 15 years, Grasim has commenced operations from 1^st February, 2018.

Chemical Business

The uptrend in domestic caustic soda prices continued in the current quarter, driven by supply related issues in China and Europe and robust demand from major consuming segments (Alumina and Textile).

Net Revenue saw a phenomenal rise 42% YoY to INR 1,311 Cr. led by higher sales volume and realization. EBITDA is up 93% YoY to INR 359 Cr. The management focus on increasing the volume of chlorine based value added products continues.

The brownfield expansion of 144 KTPA Caustic Soda at Vilayat, Gujarat is expected to be commissioned by March 2018.

Cement Subsidiary - UltraTech

UltraTech reported an increase in Net Revenue (Consolidated) by 34% (YoY) to INR 8,019 Cr. and EBITDA by 17% to INR 1,494 Cr. in the current quarter.

Financial Services Subsidiary – Aditya Birla Capital Limited (ABCL)

ABCL reported a robust financial performance for Q3FY18 with a Consolidated Revenue of INR 3,325 Cr. and EBT of INR 409 Cr. as per IGAAP (The Company’s results include, Revenue of INR 2,850 Cr. and EBT of INR267 Cr. as per IND AS).

The NBFC Lending book (Incl. housing) rose by 41% YoY to reach an all-time high of INR46,522 Cr. in Q3FY18. The Total Assets Under Management rose to highest ever level of INR 2,99,893 Cr, up by 31% YoY in Q3FY18.

Outlook

The VSF business will continue to focus on expanding the market in India by partnering with the textile value chain, achieving better customer connect through brand Liva and enriching the product mix through a larger share of specialty fibre. The new capacities likely to come on stream in China may impact the global VSF prices in the near term.

The demand for Caustic Soda in India is expected to grow with rising consumption from the Alumina and Textile sectors. In Cement, Government spending on infrastructure, rural and affordable housing will be the key demand drivers. The Company is well positioned across the country to cater to this growth in demand. In Financial Services, ABCL is geared to provide universal financial solutions to meet the customers' money need for life.