Grasim Q3 FY19 financial performance: Robust growth trajectory continues
07 February, 2019
ShareConsolidated revenue: Rs.18,419 crore up 22 per cent Y-o-Y; EBITDA: Rs.2,958 crore up 11 per cent Y-o-Y
Standalone revenue: Rs.5,293 crore up 21 per cent Y-o-Y; EBITDA: Rs.1,111 crore up 21 per cent Y-o-Y
Standalone cash profit Q3FY19: Rs.830 crore up 29 per cent Y-o-Y; 9MFY19: Rs.2,754 crore up 43 per cent Y-o-Y
Standalone cash EPS Q3FY19: Rs.12.61 and 9MFY19 Rs.41.85
| Standalone | Consolidated | |||||
|---|---|---|---|---|---|---|
| Q3 FY19 | Q3 FY18 | Q3 FY19 | Q3 FY18 | |||
 21% |
5,293 | 4,377 | Net Revenue | 18,419 | 15,153 | 22% |
| 21% |
1,111 | 920 | EBITDA | 2,958 | 2,675 | 11% |
| 28% |
608 | 474 | PAT | 958 | 543 | 76% |
Grasim’s standalone revenue for 9MFY19 at Rs.15,201 crore is up 36 per cent and EBITDA at Rs.3,639 crore is up 40 per cent Y-o-Y.
The consolidated revenue and EBITDA for 9MFY19 period stood at Rs.52,062 crore and Rs.9,024 crore up 35 per cent and 14 per cent Y-o-Y respectively.
Viscose business
The net revenue for Q3FY19 at Rs.2,617 crore rose by 20 per cent and EBITDA at Rs.477 crore, was ahead of comparable quarter last year in spite of the rise in the input costs.
The VSF business delivered highest ever production in Q3FY19 at 141KT an increase of 11 per cent and the sales volume at 134KT. The share of the domestic sales in the overall sales rose to 89 per cent in Q3FY19 from 77 per cent in Q3FY18, led by a robust demand.
The company recently launched its eco enhanced VSF variant ‘Livaeco’ on the back of the tremendous success of its brand Liva. Livaeco is a unique brand pivoted on sustainability. It is derived from Forest Stewardship Council® (FSC® C118017) certified pulp which is based on wood sourced from sustainable forests, helps conserve biodiversity and protects endangered forests. Every Livaeco garment has a unique tracer which helps trace the origin and full journey of the garment across the entire supply chain. Furthermore, it promises minimal usage of water which is turning into a scarce resource in our country vis-à-vis other natural fibres in its manufacturing process and lower greenhouse gas emissions. Livaeco is a splendid extension of Liva.
Today, Liva partners with over 40 retail brands and is available across 3,500 outlets in exclusive business outlets and large format stores. Additionally, it can be sourced from many more MBOs in 250 cities across India. This, supported by the Liva Accredited Partner Forum network, has resulted in doubling the viscose fibre consumption in the country over the past four years. Viscose business has been registering a double digit growth in the last few years.
The brownfield capacity expansion plan of 219KTPA at Vilayat is progressing well. The construction work at the project site is in full swing. The basic and detailed engineering stands completed and long lead items have been ordered.
Construction of specialty fibre line at Kharach has been completed and is scheduled for commissioning in Q4FY19.
Chemical business
Caustic soda production and sales are up 9 per cent and 10 per cent respectively to 250KT each in Q3FY19 as the demand remained buoyant.
The net revenue for the quarter rose by 19 per cent Y-o-Y to Rs.1,559 crore and EBITDA by 23 per cent Y-o-Y to Rs.441 crore driven by better realisation and higher sales volume. The management focus on increasing the volume of speciality products (chlorine based value added products) continues.
The company is in the process of implementing the proposed capacity expansion plan from 1,140KTPA to 1,310 KTPA at multiple locations. Work on majority of the project has commenced while in few projects regulatory approvals are awaited.
Capex plan
The total capex plan of approximately Rs.7,627 crore (at a standalone level) is under execution for raising capacities in both the VSF and Chemical businesses. This capital expenditure will be incurred over FY19-FY21. It will be majorly funded by internal accruals. The cash profit generated in 9MFY19 is over Rs.2,700 crore.
Cement Subsidiary - UltraTech
UltraTech reported consolidated sales revenue of Rs.9,390 crore up 19 per cent (Y-o-Y) and EBITDA of Rs.1,548 crore in Q3FY19 up 4 per cent (Y-o-Y). The consolidated sales volume registered an increase of 15 per cent on Y-o-Y basis to 19.4 MTPA.
UltraTech completed the acquisition of Binani Cement Limited (BCL) on 20 November 2018. BCL has been re-named as UltraTech Nathdwara Cement Limited (UNCL), from 13 December 2018.
The acquisition will provide UltraTech access to large reserves of high quality limestone and will consolidate UltraTech’s leadership in the fast growing northern and western markets in the country. UltraTech is confident of turning around the operations at the acquired plants, which will benefit all stakeholders and also result in synergies from optimisation of costs and improved realisations.
UltraTech has successfully integrated the 21.2 MTPA cement capacity acquired in 2017. With substantial improvements carried out, these plants are now operating in line with the existing plants of the company and have achieved a stable capacity utilisation of approximately 75 per cent.
The Scheme of Arrangement between Century Textiles and Industries Limited (“Century”), UltraTech and their respective shareholders and creditors (“the Scheme”), which was earlier approved by the Board of Directors, has since received the approval of the stock exchanges, the Competition Commission of India and the shareholders of Century and UltraTech.
The Scheme is now subject to the approval of the National Company Law Tribunal and other regulatory authorities as required.
Financial services subsidiary – Aditya Birla Capital Limited (ABCL)
Revenue and net profit after minority interest for Q3FY19 are at Rs.3,780 crore and Rs.206 crore.
Lending book (including housing) grew 29 per cent Y-o-Y to Rs.60,129 crore, backed by well-matched asset and liability mix. Raised about Rs.9,000 crore of long term funding during the quarter.
Average assets under management at Rs.2,58,833 crore, domestic equity AAUM grew by 8 per cent year–on-year. SIP book contributes 31 per cent (Q3FY18 25 per cent) of domestic equity AUM. Monthly SIP book (including STP) over Rs.1,000 crore.
Individual first year premium grew 68 per cent Y-o-Y to Rs.1,039 crore for 9MY19. The persistency ratios witnessed a consistent improvement. The 13-month persistency ratio improved by 3 per cent to 75 per cent in 9M FY 2018-19 over the last one year.
In the health insurance business, gross written premium crossed Rs.139 crore in Q3FY19.
1Rank and Market share amongst players (excluding LIC) based on individual FYP: source IRDAI
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 its brands Liva and Livaeco and enriching the product mix through a larger share of specialty fibre. VSF continues to be fastest growing textile fibre globally. However, the new capacities likely to come on stream in China may impact the global VSF prices in the near term.
The chemical business is witnessing a healthy growth with the completion of its recent capacity expansion. Additional growth is expected from the proposed caustic soda expansion and new product lines for specialty chemicals.
Cement demand is witnessing an upward movement with higher spends on infrastructure and the government sponsored housing programme. With the additional capacities acquired by UltraTech through the organic and inorganic route and its rapid ramp-up, UltraTech is very well placed to participate in the growth of the economy.
In financial services, Aditya Birla Capital will continue to build on its strong presence in different sectors and will focus on building profitable scale across its platform.
Overall the outlook is positive.
Cautionary statement
Statements in this “Press Release” describing the company’s objectives, projections, estimates, expectations or predictions may be “forward looking statements” within the meaning of applicable securities law and regulations. Actual results could differ materially from those express or implied. Important factors that could make a difference to the company’s operations include global and Indian demand supply conditions, finished goods prices, feedstock availability and prices, cyclical demand and pricing in the company’s principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the company conducts business and other factors such as litigation and labour negotiations. The company assumes no responsibility to publicly amend, modify or revise any forward looking statement, on the basis of any subsequent development, information or events, or otherwise.
