{"id":156280,"date":"2023-11-15T10:44:46","date_gmt":"2023-11-15T15:44:46","guid":{"rendered":"https:\/\/44.250.171.167\/?p=156280"},"modified":"2023-11-15T10:44:47","modified_gmt":"2023-11-15T15:44:47","slug":"grasim-industries-limited-q2-fy24-earnings-conference-call-insights","status":"publish","type":"post","link":"https:\/\/alphastreet.com\/india\/grasim-industries-limited-q2-fy24-earnings-conference-call-insights\/","title":{"rendered":"Grasim Industries Limited Q2 FY24 Earnings Conference Call Insights"},"content":{"rendered":"<p><strong>Key highlights from Grasim Industries Limited (GRASIM) Q2 FY24 Earnings Concall<\/strong><\/p>\n<ul>\n<li><strong>Financial Performance<\/strong>\n<ul>\n<li>Consolidated revenue grew 10% YoY to INR 30,221 crore, EBITDA grew 14% YoY to INR 4,509 crore.<\/li>\n<li>Growth driven by cement and financial services businesses.<\/li>\n<li>Standalone revenue de-grew 4% YoY to INR 6,442 crore, EBITDA de-grew 21% YoY to INR 1,354 crore.<\/li>\n<li>Sales volumes grew in viscose and caustic soda but realizations impacted by global price decline.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Capex and Business Updates<\/strong>\n<ul>\n<li>Implementing highest ever capex plan, Board approved INR 4,000 crore rights issue to fund capex.<\/li>\n<li>Epoxy capacity expansion under commissioning, expected operational in Q3.<\/li>\n<li>Received consent to operate for 3 paints plants &#8211; Panipat, Ludhiana, Cheyyar.<\/li>\n<li>B2B ecommerce platform Birla Pivot crossed INR 100 cr revenue milestone.<\/li>\n<li>Launched private label tiles on Birla Pivot.<\/li>\n<\/ul>\n<\/li>\n<li><strong>VSF Business Performance and Outlook<\/strong>\n<ul>\n<li>Margins recovered on QoQ basis despite fall in realizations.<\/li>\n<li>Margin improvement in Q2 due to higher volumes giving operational leverage and lower input costs.<\/li>\n<li>International VSF prices remained under pressure in Q2 and currently.<\/li>\n<li>Margins expected to remain volatile given commodity price volatility.<\/li>\n<li>Historical 20-year average EBITDA per kg for VSF is INR 25-26.<\/li>\n<li>Company remains optimistic on achieving historical profitability levels over long term.<\/li>\n<\/ul>\n<\/li>\n<li><strong>New Businesses Losses<\/strong>\n<ul>\n<li>Higher losses in Q2 vs previous quarters from new businesses like B2B and paints.<\/li>\n<li>Majority of losses from paints business as large teams hired and costs not capitalized.<\/li>\n<li>Losses expected to continue in near term as businesses scale up.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Capital Allocation Strategy<\/strong>\n<ul>\n<li>Investing in core viscose and chemicals businesses with recent capacity expansions.<\/li>\n<li>Large capex of INR 10,000 crores for paints business over current and next year.<\/li>\n<li>No major capex for B2B ecommerce business, exploring private labels with contracted manufacturing.<\/li>\n<li>Expects valuation gap to reduce as standalone business share in consolidated financials increases.<\/li>\n<\/ul>\n<\/li>\n<li><strong>VFY Business Performance<\/strong>\n<ul>\n<li>Anti-dumping duty on VFY from China only at recommendation stage, not approved yet.<\/li>\n<li>Chinese VFY exports rising amid low domestic demand putting price pressure.<\/li>\n<li>India textile demand during festive season lower than anticipated.<\/li>\n<li>Lower demand in India and China weighing on VFY prices.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Chemicals Business<\/strong>\n<ul>\n<li>Power costs were favorable for chemicals business in Q2.<\/li>\n<li>Weak demand environment for key chlor-alkali derivatives like textiles and agrochemicals.<\/li>\n<li>One-time higher maintenance costs in chlorine derivative plants impacted costs.<\/li>\n<li>Specialty chemicals (epoxy) volume grew 25% YoY, profitability grew in line with volume.<\/li>\n<li>Ongoing investments in chlorine derivatives like ECH project.<\/li>\n<li>No plans for polyvinyl chloride; tie up with Lubrizol for CPVC.<\/li>\n<li>Forward integration into pipes not explored yet.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Caustic Soda Demand Outlook<\/strong>\n<ul>\n<li>Key caustic end market textiles facing weak demand both in viscose and cotton.<\/li>\n<li>Caustic also impacted by weak global demand environment.<\/li>\n<li>Spread across different geographies provides some demand cushion vs local players.<\/li>\n<li>Demand outlook depends on recovery in key derivatives like textiles, agrochemicals etc.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Paints Business Update<\/strong>\n<ul>\n<li>3 plants at Ludhiana, Panipat, Cheyyar received CTO, to be operational in Q4 .<\/li>\n<li>Decorative paints launch also planned in Q4 Jan-Mar 2023.<\/li>\n<li>PaintCraft test launch feedback satisfactory but using external products.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Renewables Business<\/strong>\n<ul>\n<li>Implementing 1 GW renewable projects, to be commissioned in Q1 FY24.<\/li>\n<li>Capex funding through 20-25% equity, rest debt varying by project.<\/li>\n<li>Capital employed increasing reflecting project capex.<\/li>\n<\/ul>\n<\/li>\n<li><strong>VSF Capacity Expansion<\/strong>\n<ul>\n<li>Currently operating near full utilization levels.<\/li>\n<li>Scope to increase production from existing plants through debottlenecking.<\/li>\n<li>No significant new investment planned for capacity expansion.<\/li>\n<li>Looking at operational improvements to maximize existing capacity.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Key highlights from Grasim Industries Limited (GRASIM) Q2 FY24 Earnings Concall Financial Performance Consolidated revenue grew 10% YoY to INR 30,221 crore, EBITDA grew 14% YoY to INR 4,509 crore. Growth driven by cement and financial services businesses. Standalone revenue de-grew 4% YoY to INR 6,442 crore, EBITDA de-grew 21% YoY to INR 1,354 crore. [&hellip;]<\/p>\n","protected":false},"author":1767,"featured_media":154818,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[9825,392,5753],"tags":[10169,2132,10139],"class_list":["post-156280","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-earnings-call-highlights","category-earnings","category-industrials","tag-earnings","tag-manufacturing","tag-textile-manufacturing"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/alphastreet.com\/india\/wp-content\/uploads\/2023\/10\/CC_Image_1.jpg","jetpack_likes_enabled":false,"jetpack-related-posts":[{"id":161197,"url":"https:\/\/alphastreet.com\/india\/apar-industries-limited-q4-fy24-earnings-conference-call-insights\/","url_meta":{"origin":156280,"position":0},"title":"Apar Industries Limited Q4 FY24 Earnings Conference Call Insights","author":"Praveen","date":"May 15, 2024","format":false,"excerpt":"Key highlights from Apar Industries Limited (APARINDS) Q4 FY24 Earnings Concall Financial Performance Q4 FY24 consolidated revenue grew 9% YoY to INR 4,455 crores. 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