Grasim Industries Ltd. share price target

Grasim Industries’ (Grasim) Q1FY23 standalone EBITDA at Rs13.2bn (up 78% YoY) was significantly above our / consensus estimates led by higher VSF volumes (94% utilisation of expanded capacities) and record profitability (30% EBITDA margins) in chemicals.

to Rs 12,984.93 crore (accounting for 52.19% of total sales). Sales of Chemicals - Caustic Soda 2.51% of total sales). Sales of Financial Services segment has gone up 11.53% to Rs 5,599.93 crore (accounting for 22.51% of total sales). Sales of Viscose - Pulp,Viscose Staple Fibre and Filament Yarn segment has gone up 55.49% to Rs 3,335.44 crore (accounting for 13.40% of...

Focus on backward integration in the Chemical segment should improve chlorine usage as Grasim plans to increase chlorine consumption in value added products (VAPs) to 40% by FY25E from 28% in FY21. Chemical segment's OPM should improve to 19% in FY23E from 13% in FY21. Further, likely capacity expansions of 37%/33% in the VSF/Caustic soda segments, respectively, should improve volume/profits during FY22-24E. We estimate a 16%/15% volume CAGR for the VSF/Chemical business, respectively, over FY21-24. Grasim's plan to augment the capex of its Paints business indicates its intent of...

Strong-demand momentum, increase in prices and capacity expansion remain key growth drivers. However, higher energy, raw material, and logistics costs are expected to put pressure on margins. Hence, we...

businesses. Backed by strong demand, realisation and volumes have improved in key businesses, offsetting the cost increase. Grasim's consolidated revenue for Q2FY22 was up 26 per cent at Rs 22,564.22 crore as against Rs.17949.53 crore during the corresponding quarter last year. Consolidated PBIDTA grew 12% to Rs 5,289.87 crore in Q2 FY22 as against Rs 4,439.51 crore in Q2 FY21. The demand momentum picked up in Q2 FY22 and continued thereafter across all businesses. Realisation and volumes have improved in key businesses on account of strong...

Grasim' 2QFY22 operating profit was 7% below our estimate due to lower profits in the Chemical segment (OPM down 4.9pp QoQ v/s our estimate of a 1.3pp improvement). Volume/EBITDA was 10%/16% above our estimate. The management said the impact of price hikes will be felt in 2HFY22 and margin should improve in the Chemical segment. We have reduced our FY23E standalone EBITDA by 7% to factor in higher costs for the Chemical business. We value the standalone business at 6x Sep'23E EV/EBITDA and other listed subsidiaries at a 40% holding company...