Grasim Consolidated Net Profit Surges 50 per cent in Q2

Net Effect : Higher operating leverage, lower interest costs help boost show

Mumbai: Aditya Birla Group firm Grasim Industries on Friday reported a 50.4 per cent rise in consolidated net profit for the September quarter, helped by higher operating leverage and lower interest cost.

The company’s Q2 net profit stood at Rs. 846 crore against Rs. 562.5 crore a year ago. Analysts expected the company to post a net profit of Rs. 821.1 crore on net sales of Rs. 9,136.7 crore, according to a Bloomberg poll.

Net sales of the company rose 2.7 per cent to Rs. 9,261.8 crore during the quarter against Rs. 9,016.2 crore during the corresponding quarter last year.

Other income rose 51.6 per cent to Rs. 312.13 crore from a year-ago period, while finance cost fell 11.6 per cent to Rs. 166.5 crore.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 29 per cent to Rs. 2,098 crore. Overall sales volumes rose 9 per cent on a year-on-year basis, led by a 19 per cent growth in domestic markets.

Besides increased volumes and realisation, better sales mix and operating efficiencies also added to higher profitability, the company said a statement.

In its sectoral outlook, the company said it expects stable outlook for the viscose staple fibre business and it will continue to focus on expanding the VSF market in India. The company sees that the demand for caustic in India is expected to grow with the rising demand from the end-user industry.

“The commissioning of new capacities in the industry may increase supply in the medium term. Our plan is to increase caustic capacity by 2,08,000 TPA to 10,48,000 TPA through brown-field expansion at Vilayat (Gujarat) and de-bottlenecking at other plants is on track,” the company said.

“The government’s thrust on developing infrastructure spending, good monsoon and development of smart cities leading to growth in housing demand in Tier-I and Tier-II cities augurs well for the cement
industry. The slower pace of new capacity addition will lead to better industry utilisation,” it added.

Grasim shares closed up 1 per cent at Rs. 965.60 apiece on Friday on the BSE. Meanwhile, the company’s board on Friday approved dividend distribution policy for the firm as per the Sebi (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The objective of this policy is to provide dividend distribution framework to the stakeholders of the company. It also informed that the process of seeking requisite regulatory approvals for the scheme of merger of Aditya Birla Nuvo with Grasim and subsequent demerger and listing of the financial services business is in progress.

Its board on Thursday approved Dividend Distribution Policy for the firm as per the Sebi (Listing Obligations and Disclosure Requirements) Regulations, 2015.