Grasim's Q2 Profit Falls 46 % to Rs 1,100 Crore, Dragged by UltraTech and Higher Interest Depreciation

Aditya Birla Group flagship holding firm Grasim Industries Ltd on Thursday reported a 45.64 per cent decline in consolidated net profit at Rs 1,100.16 crore in the second quarter ended September 2024, impacted by lower profitability by its cement business and higher interest and depreciation charges on account of investments in renewables business.

The company had posted a net profit of Rs 2,024.05 crore during the July-September quarter a year ago, according to a regulatory filing by Grasim Industries, which is the holding firm for group companies such as UltraTech, Aditya Birla Capital and Aditya Birla Renewables.

Its revenue from operations was up 11.05 per cent to Rs 33,562.85 crore during the quarter under review. It was at Rs 30,220.68 crore in the corresponding period of the previous fiscal.

The revenue growth was "driven by the superior performance of Financial Services, Cellulosic Staple Fibre and Specialty Chemicals businesses", Grasim Industries said an earnings statement.

However, consolidated EBITDA declined "as a result of lower profitability in the cement business and initial investments in the paints business under brand Birla Opus", it added.

"Further, higher interest and depreciation charges on account of investments in the building materials and renewables businesses has led to lower PAT," said Grasim.

Total expenses of Grasim Industries were 15.75 per cent higher in the September quarter to Rs 31,993.03 crore.

Its total income, which includes revenue from other sources, was at Rs 33,958.21 crore, up 11.31 per cent in the September quarter.

Grasim's revenue from its cellulosic fibre business in the September quarter was up 6.07 per cent to Rs 4,125.19 crore. The growth was helped by price improvement in CSF (Cellulosic Staple Fibre) prices.

"CSF business achieved its highest ever quarterly sales volume at 219 KT, up 4 per cent YoY, led by stable domestic demand. EBITDA Margins improved on the back of higher sales volume and improving trend in global prices," it said.

Grasim's revenue from chemicals business was up 3.31 per cent to Rs 2,054.37 crore in the September quarter, led by an improvement in caustic soda international average spot prices.

Its revenue from building material business reported a growth of 3.25 per cent to Rs 16,682.75 crore. It was at Rs 16,156.14 crore in the July-September quarter a year ago.

Grasim's 'building materials' comprises its cement business UltraTech, its newly launched paints business and B2B e-commerce business Birla Pivot.

The growth was "driven by paints and B2B e-commerce businesses", said Grasim.

However, the EBITDA of the segment stood at Rs 1,886 crore, down 28 per cent YoY, mainly due to lower realisations in the cement business and initial investments in 'Birla Opus', its paints business.

The consolidated sales volumes of its cement business UltraTech were up by 4 per cent YoY to 27.84 million tonnes. However, like other makers, it also faced lower realisation.

Grasim's new set up of paints business under the brand name 'Birla Opus' is ramping up production.

Production is steadily ramping up at three plants -- Ludhiana, Panipat and Cheyyar -- commissioned in Q1 of this financial year. Trial production has started at Chamarajanagar and Mahad plants, it said.

"Birla Pivot, the B2B e-commerce business, revenue continues to grow in line with the plan and remains on track to achieve revenue of USD 1 billion in three years as announced in FY24," it said.

Similarly, revenue from the financial services segment -- Aditya Birla Capital Ltd (ABCL) -- was up 33 per cent to Rs 10,251.58 crore. It was at Rs 7,707.91 crore a year ago.

"The overall lending portfolio (NBFC and HFC) increased by 27 per cent YoY to Rs 1,37,946 crore. The total AUM (AMC, life insurance and health insurance) crossed the milestone of Rs 5,00,000 crore, with a growth of 24 per cent YoY," it said.

Revenue from its other business, which includes textiles, renewables and insulators was up 2.13 per cent to Rs 777.37 crore.

Over the capital expenditure, Grasim said for H1 FY25, it stood at Rs 1,884 crore.

"The budgeted standalone capex for FY25 is Rs 4,691 crore, of which Rs 3,000 crore is towards new growth businesses.

Besides, the board has approved an investment of Rs 287 crore for additional pulp capacity at Harihar and Rs 20 crore for textiles business," it said.

Over the outlook, with its significant presence across businesses, the company said it is well positioned to capitalise on the opportunities in diverse sectors of the fast-growing Indian economy.

"The government's continued focus on infrastructure & housing, manufacturing, financialisation and thrust on increasing economic prosperity of the large section of people augurs well for the company," it added.

Share of Grasim Ltd on Thursday settled at Rs 2,528.55 on BSE, up 0.79 per cent from the previous close.