Morgan Stanley 'Overweight' on Grasim Industries

Morgan Stanley has assigned an ‘Overweight’ rating to Grasim Industries. Grasim reported standalone revenues at Rs 1,400 crore, down 1% y-o-y.

The performance was driven by better-than-expected volumes in the VSF segment. Realisation was broadly in line with estimate, as global VSF prices remained weak. Ebitda margin was flat yoy at 15.6%, though it was down 216bps qoq, given weak VSF realisation.

Core Ebitda declined 1% yoy to Rs 210 crore. Core PAT was 8% lower than estimate, given higher taxes. However, PAT was supported by Rs 200 crore of gains from stake sales in group firms.

On a consolidated basis, Grasim reported revenues of Rs 7,600 crore, 5% yoy growth. Core PBT at Rs 138-crore, was down 8%, but 9% ahead of its estimate. Ebitda at Rs 1460 crore, down 3% yoy, was better than its forecast of Rs 1,360 crore, primarily given better standalone results.

Results for the cement unit, Ultratech Cement, were in line with its estimate. VSF volumes were flat yoy at 95,161 toms, the highest quarterly volumes for the company.

Over the next 12 months, it will benefit from a volume perspective with the likely commissioning on new capacity.