InvestorQ : What is your take on the Grasim numbers after the latest quarter showed profits doubling in the Dec-20 quarter?
Arti Chavan made post

What is your take on the Grasim numbers after the latest quarter showed profits doubling in the Dec-20 quarter?

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Rutuja Nigam answered.
6 months ago
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The holding company of the massive Aditya Birla Group, Grasim Ltd, reported profit after tax of Rs.1,384 crore for the Dec-20 quarter on the strength of better scale economies. In terms of top line, Grasim reported 12.73% growth in on consolidated basis at Rs.20,986 crore. Needless to say, cement and financial services account for 83% of the top line revenues of Grasim and both saw a sharp expansion in the quarter.

While cement is driven by Ultratech and financial services by AB Financial Services, the other verticals of Grasim like the viscose staple fibre business, filament yarn business and the caustic soda business were marginally lower on a yoy basis. These are the businesses that are still housed under the holding parent company.

Operating profits were up 84% at Rs.3,139 crore essentially because of the economies of scale story. Just consider that the operating costs grew by just 4.8% on a yoy basis against sales growth of 12.7%. OPM or the operating margins, consequently, improved sharply from 9.17% in Dec-19 quarter to 14.95% in Dec-20. Profits were largely driven by cement and financial services only.

PAT growth of 103% at Rs.1,384 crore can be largely attributed to the operating profit growth spilling over to the bottom line. In addition, there was the additional advantage in the form of higher share of profits in associate companies and JVs that also help boost the bottom line of Grasim. PAT margins expanded sharply from 3.65% to 6.59% in the Dec-20 quarter.

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