Grasim Q3 net seen up 33% at Rs 347cr, margin may expand 180 bps

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Aditya Birla Group company Grasim Industries
‘ third quarter profit on standalone basis may grow 33 percent year-on-year to Rs 347 crore, led by operational performance in VSF and chemical businesses.

Revenue during the quarter is seen rising 5 percent to Rs 2,461 crore compared with Rs 2,343 crore in same period last year, according to analysts polled by CNBC-TV18.

Operating profit is expected to increase 14 percent year-on-year to Rs 527 crore and margin may expand 180 basis points to 21.4 percent in the quarter ended December 2016 as raw material cost (pulp cost) has been steady.

VSF and chemical business continued to operate at near-capacity utilisation. Analysts expect viscose staple fibre volumes to grow 2 percent and realisations 3-4 percent YoY.

They expect chemical business volumes (caustic soda and allied chemicals) to decline 4 percent YoY.

Key issues to watch out for would be outlook on VSF business, and strategy to utilise upcoming capacities globally; impact of demonetisation on caustic soda demand; and updates on progress of merger with Aditya Birla Nuvo.

Grasim’s promoters announced a restructuring wherein the company will merge with Aditya Birla Nuvo (ABNL) and own 57 percent of listed Aditya Birla Financial Services (ABFSL) and 28 percent of Idea Cellular.

Majority of consolidated numbers already priced in via UltraTech Cement that contributes roughly 70 percent to topline & bottomline of consolidated Grasim numbers. Grasim has 60.25 percent shareholding in UltraTech.