Grasim Industries Ltd. share price target

Brand building and premiumization in VSF taking center stage VSF management highlights lack of pull factor in VSF product among end consumers. VSF offers best combination of strength and comfort compared to cotton and PSF. Therefore,...

Grasim Industries reported another strong quarter, with parent EBITDA margins at 19.6% (estimated 17.9%, 287bps QoQ, 802bps YoY). This was driven by strong VSF volumes (121kT, 24.4% QoQ, ~100% utilisation) and better realisations (133/kg, 7.0% YoY, 5.1 QoQ). VSF pricing held ground while Grasim?s mix improved on higher specialty fibre volumes.

Grasim Industries reported a strong, in-line quarter, with standalone EBITDA margins at 15.4% (estimate of 16.1%, 240bps QoQ, 200bps YoY). This was driven by better volumes (114Kt, 12.7% YoY) and realisations (Rs 126/kg, 3.7% QoQ, 0.3% YoY) at VSF business, which reported EBITDA/kg of ~Rs 18.6.

Grasim Industries standalone numbers were ahead of our estimates (EBITDA Rs 2.2n vs. est 1.8bn). This was driven by strong volume growth (103 kt, 19.2% YoY, -13.1% QoQ), despite Nagda shutdown for 2 months in 1Q, as Vilayat capacity ramped up.

Buy on dips to Rs 3,093 - Rs 3,234 for Target of Rs 3,515 in 1 quarter

Grasim Industries standalone numbers were inline (EBITDA Rs 1.81n vs. est 1.78bn). Volume growth plateaued (97kt, flat YoY) despite higher production ( 15% YoY) due to issues in the supply chain (per mgmt).