Grasim Inds — Q2 FY26 earnings call

Call held 5 Nov 2025

Management summary

Grasim Industries reported a strong Q2 FY26 with standalone revenue up 26% YoY to ₹9,610 crores, driven by robust performance in Cement and new growth businesses like Birla Opus Paints and Birla Pivot B2B e-commerce. While Cellulosic Fibers and Chemicals faced headwinds from input costs and softening prices, the company maintained its strategic growth trajectory. Net debt reduced by ₹292 crores, and the paints business achieved significant capacity and brand recognition milestones.

Highlights

  • Trailing 12-month revenues nearing ₹1,60,000 crores, up 14% from FY22.

  • Standalone revenue grew 26% YoY to ₹9,610 crores, reaching a record high.

  • Birla Opus (Paints) achieved second largest decorative paints capacity (1,332 million liters per annum) and reached #2 brand in top-of-mind recall within 18 months of launch.

  • Birla Pivot (B2B e-commerce) revenues were sequentially higher by 15% despite monsoons, remaining on track for $1 billion by FY27.

  • Cement business sales volume grew 6.9% YoY to 33.85 million tons, and EBITDA per metric ton grew 32% YoY to ₹966.

  • Net debt declined by ₹292 crores to ₹6,861 crores, with net debt to TTM EBITDA improving to 2.19x.

Concerns

  • Cellulosic fiber EBITDA degrew 29% to ₹350 crores due to high input prices and cheaper imports from China.

  • Organized decorative paint industry (excluding Birla Opus) degrew slightly YoY in Q2 FY26.

  • Global caustic prices softened, impacting Chemicals business profitability.

  • China's GDP growth slowed to 4.8% in Q3 2025, with frozen property demand and weak household confidence.

  • Monsoon season led to a low single-digit sequential decline in Birla Opus sales.

Key financials

  1. Trailing 12-month Revenue ₹1.60L Cr
  2. Standalone Revenue ₹9,610 Cr +26%YoY
  3. Consolidated Sales Volume 33.85 million tons +6.9%YoY
  4. Cement EBITDA/ton ₹966 +32%YoY
  5. Cellulosic Fibers Revenue ₹4,149 Cr +1%YoY
  6. Cellulosic Fibers EBITDA ₹350 Cr -29%YoY

What they filed

Q1 FY27: revenue up 21.4%, net profit up 38.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue34,223 35,378 44,267 40,118 39,900 +17%44,312 +25%51,101 +15%48,716 +21%
EBITDA6,026 6,804 8,750 8,822 7,671 +27%8,870 +30%10,874 +24%11,152 +26%
Net profit983 1,734 2,973 2,771 1,498 +52%2,233 +29%3,684 +24%3,846 +39%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Cellulosic Fiber Business
    ₹4,149 Cr Revenue0.01 YoY Revenue Growth₹350 Cr EBITDA-0.29 YoY EBITDA Growth-0.05 YoY CSF Sales Volume Growth0.03 YoY Cellulosic Fashion Yarn Sales Volume Growth24% Specialty Fiber Volume Mix
  • Chemicals Business
    30% Specialty Chemicals Revenue Contribution0.34 YoY Specialty Chemicals Volume Growth
  • Cement Business (UltraTech)
    33.85 million tons Sales Volume0.069 YoY Sales Volume Growth₹966 EBITDA per metric ton0.32 YoY EBITDA per metric ton Growth
  • Financial Services (Aditya Birla Capital)
    0.03 YoY Revenue Growth₹1.78L Cr Lending Portfolio (NBFC, Housing Finance)0.29 YoY Lending Portfolio Growth₹5.50L Cr AUM (AMC, Life, Health Insurance)0.1 YoY AUM Growth
  • Other Businesses - Textile
    ₹586 Cr Revenue0.06 YoY Revenue Growth₹24 Cr EBITDA
  • Other Businesses - Renewable
    ₹259 Cr Revenue1 YoY Revenue Growth

Capital allocation

high confidence
  • Capex ₹941 Cr this quarter · ₹2,263 Cr (FY26) planned
    • Paints business project spend (total as of Sep 30, 2025) ₹9,727 Cr
    • Lyocell capacity expansion
    • CPVC and ECH projects
    Grasim has outlined a capex outlay of INR2,263 crores for FY '26, of which INR941 crores was deployed in first half of financial year '26. The total capex spend for Paints business stood at INR9,727 crores as on 30th September 2025. Two key projects, CPVC in partnership with Lubrizol and ECH remains on track. The mechanical completion is expected by Q3 FY '26.
  • Debt Net ₹6,861 Cr · 2.2× EBITDA
    On the balance sheet side, net debt declined by INR292 crores and stood at INR6,861 crores as on 30th September 2025 as against INR7,153 crores as on 30th June 2025. Stand-alone net debt to TTM EBITDA stood at 2.19x as against 2.41x.

Guidance & targets

Paints

  • Market Position Paints · within three years of full-scale operation · High confidence Number two and profitable
    I'd like to remind you the vision that the company has announced to the market, we have committed to be number two as well as profitable within three years of full-scale operation. We will stay course on that.

    — Himanshu Kapania

  • Revenue Growth Paints · Q4 FY26 to Q1 FY27 · High confidence Double-digit growth
    And on a stand-alone basis, our assessment is we will be in quarter 4 to quarter 1 of next year, double digit. We are trying to reach this in the quarter 4.

    — Himanshu Kapania

  • Volume Market Share vs. Capacity Share Paints · long term · Medium confidence Converge
    But in the long term, our aim is to ensure that the volume market share and capacity market share converge all investments and all efforts, whether it's advertising, manpower, distribution, servicing and any new initiatives will be directed towards to match our volume market share closer to our capacity share.

    — Himanshu Kapania

  • Turnover Paints · FY28 · High confidence ₹10,000 crores
    Understood. Understood. And your guidance of INR10,000 crores turnover by FY '28, does that remain valid? Yes.

    — Himanshu Kapania

B2B E-commerce (Birla Pivot)

  • Revenue B2B E-commerce (Birla Pivot) · FY27 · High confidence ₹8,500 crores or $1 billion
    Our earlier recommendation was that we will achieve $1 billion scale in FY '27. There is a likely chance that we will get there and hit that milestone sooner. But for now, we are not changing any of our direction as of now.

    — Sandeep Komaravelly

Chemicals

  • Renewable Energy Level Chemicals · next three years · Medium confidence 40%

    From 24-25% today

    So firstly, we are at about 24%, 25% renewable level as of now, right? If I look at all that we have and all the state-level regulations, we expect that in the next three years, we should be able to technically get to 40%.

    — Jayant Dhobley

  • ECH and CPVC Contribution Chemicals · Q1 of next financial year · High confidence Meaningful contribution
    So that ECH and CPVC would be meaningfully contributing from Q1 of next financial year.

    — Jayant Dhobley

What to watch in Q3 FY26

Birla Opus Paints double-digit growth

Q4 FY26 to Q1 FY27
Current Low single-digit sequential decline in Q2 FY26 due to monsoon, but strong YoY growth.
Target Double-digit growth on a standalone basis.

Why it matters

This will confirm the paints business's ability to achieve aggressive growth targets and capture market share post-monsoon.

And on a stand-alone basis, our assessment is we will be in quarter 4 to quarter 1 of next year, double digit. We are trying to reach this in the quarter 4.

Risks & concerns

  • Cheaper imports and high input costs impacting Cellulosic Fibers

    high

    Realizations for cellulosic fashion yarn are impacted by cheaper imports from China, and high input prices for key raw materials led to a 29% degrowth in EBITDA.

    Management acknowledged

  • Global economic slowdown/friction

    medium

    The global economy is not in recession but lacks synchronized expansion, with trade rewiring and geopolitics becoming a single order economic variable.

    Management acknowledged

  • Fed rate cuts indicating growth/employment risks

    medium

    Fed rate cuts suggest that the balance of risks is shifting towards growth and employment concerns.

    Management acknowledged

  • China's economic slowdown

    medium

    China's GDP growth slowed to 4.8% in Q3 2025, with frozen property demand, weak household confidence, and private entrepreneurs holding back capex decisions.

    Management acknowledged

  • Softening global caustic prices and elevated raw material prices impacting Chemicals

    medium

    Global caustic prices have softened, and elevated raw material prices continue to impact specialty chemical profitability.

    Management acknowledged

  • Monsoon impact on paints industry

    medium

    The paints industry experienced a double-digit sequential decline in Q2 FY26 due to the monsoon season, which slows exterior products and institutional business.

    Management acknowledged

Q&A highlights

5 direct
Leadership transition in Birla Opus (Paints) post Rakshit's resignation Direct
In the life of a professional, individuals take their call on where they want to build their career. Rakshit has helped Birla Opus from the very start of the business to build the project and in the initial phase of launch. Now Birla Opus has a very strong, high-performing team and will continue to stay course on the vision that has been announced to the market. I'd like to remind you the vision that the company has announced to the market, we have committed to be number two as well as profitable within three years of full-scale operation. We will stay course on that.

Addresses investor concerns about leadership stability and strategic continuity for a key growth business, reassuring that the vision remains unchanged.

Asked by Avi Mehta

Paints business performance in Q2 FY26 vs. industry and impact of monsoon Direct
As regards to the performance of quarter 2, this is our first time that we have faced a full monsoon season. And the first time we saw that the overall industry on a quarter-on-quarter basis has had a double-digit decline. And it is our internal estimate on a year-on-year basis. If you were to eliminate the performance of Birla Opus, the industry is slightly negative in performance. Our Birla Opus on a year-on-year basis had a significant growth, but on a quarter-on-quarter basis, had a low single-digit decline, which was primarily during the periods of July and August.

Provides context on the paints industry's Q2 performance, highlighting Grasim's relative outperformance despite a sequential decline due to seasonality.

Asked by Avi Mehta

B2B e-commerce (Birla Pivot) revenue target and potential for revision Partial
I think your observation is right. Our growth has been compared to what our expectations, I think we've been doing very well compared to our plan. We are on track. And I think our earlier recommendation was that we will achieve $1 billion scale in FY '27. There is a likely chance that we will get there and hit that milestone sooner. But for now, we are not changing any of our direction as of now.

Indicates strong performance and potential to exceed or achieve targets earlier for a new growth business, but management maintains current guidance for now.

Asked by Rahul Gupta

Number of dealers and traction from financing/EMI for paints sales Direct
You're right. We have expanded our distribution network to beyond our original guidance of 8,500 towns to 10,000 towns... Your concern has been how is it that we have been expanding our reach, and it has not translated into revenue. To measure that, we should look at the number of dealers that have participated with us in September and October. And we've been growing dealer participation on a month-on-month basis... So, the overall number of dealers have continued to grow, if I were to measure the total number of dealers who participated in quarter two over quarter one. What is important is you will say the throughput may have fallen. The throughput may have fallen on a quarterly basis. But when we measure on a September basis, the throughput is back and both in September and in October, dealer throughput is at levels and slightly higher than what it was at quarter one.

Clarifies distribution expansion and addresses concerns about revenue translation, emphasizing throughput and sustained dealer engagement rather than just dealer count.

Asked by Navin Sahadeo

Chemicals business EBITDA run rate, value-added products, and renewable energy contribution Direct
So firstly, we are at about 24%, 25% renewable level as of now, right? If I look at all that we have and all the state-level regulations, we expect that in the next three years, we should be able to technically get to 40%... So that ECH and CPVC would be meaningfully contributing from Q1 of next financial year.

Provides specific timelines for new capacity contributions and targets for renewable energy adoption in the Chemicals segment, crucial for future profitability and sustainability.

Asked by Nirav Jimudia

Paints market share trends and drivers for acceleration Partial
I'm not sure how you're doing your calculations and how you're arriving at quarter 1, 20 basis point or quarter 2 at a slow market share growth. So first and foremost, I want to register the revenue reporting of paint companies has 3 broad components: decorative paints, putty business as well as industrial paints... And last quarter, we had talked about reaching double digit, and we have grown more than 700 to 800 basis points in this quarter further. So, we are there. And on a stand-alone basis, our assessment is we will be in quarter 4 to quarter 1 of next year, double digit.

Highlights a discrepancy in market share assessment and reiterates strong growth expectations for the paints business, emphasizing different components of paint revenue and future targets.

Asked by Jai Doshi

Impact of Rakshit's resignation on Birla Opus strategy Direct
It's a natural phase of professionals growing in their career. This will have no impact on the business and business will be as usual. And there will be no change in the growth strategy.

Reassures investors that the leadership change will not alter the strategic direction or growth plans for the paints business, maintaining continuity.

Asked by Prateek Kumar

3 min read 8 chapters

Detailed narrative

Macroeconomic Headwinds and India's Resilience

The global economy is navigating a period of non-synchronized expansion, facing challenges such as Fed rate cuts signaling growth risks and China's GDP growth slowing to 4.8% in Q3 2025 amidst frozen property demand. Geopolitical tensions and tariff-based negotiations add to market friction. Despite these global headwinds, India remains a positive outlier, driven by strong domestic consumption, robust investment, and supportive government reforms like rationalized GST slabs, leading to an upward revision of GDP growth for FY25-26.

Grasim's Diversified Growth and Resilience

Grasim's multi-segment presence continues to drive resilient growth, with trailing 12-month revenues nearing ₹1,60,000 crores, marking a 14% increase from FY22. Standalone revenue grew 26% YoY to a record high of ₹9,610 crores in Q2 FY26. The strategic entry into high-growth businesses like Birla Opus Paints and Birla Pivot B2B e-commerce two years ago is proving successful, with both ventures on track to achieve their stated targets, demonstrating the company's ability to thrive in a volatile global environment.

Birla Opus Paints: Capacity, Market Share, and Innovation

Birla Opus has completed its announced project phase, commissioning its sixth plant in Kharagpur, West Bengal, with 236 million liters per annum capacity, bringing total installed capacity to 1,332 million liters per annum. This makes Birla Opus the second largest decorative paints company by capacity (24% of industry capacity) and has achieved #2 brand in top-of-mind recall. Despite a low single-digit sequential decline in Q2 due to monsoon, the business saw significant YoY growth and strong secondary sales, driven by innovations like the Assurance Campaign and PaintCraft services.

Birla Pivot (B2B E-commerce): Rapid Expansion and Future Outlook

Birla Pivot is rapidly expanding its product portfolio beyond building materials to include polymers, solvents, textile chemicals, and nonferrous metals, with revenues sequentially higher by 15% in Q2 FY26 despite monsoons. The platform is on track to achieve its target of ₹8,500 crores ($1 billion) by FY27, with management noting a 'likely chance' to hit this milestone sooner. Its integrated e-commerce platform and focus on end-to-end visibility are driving strong growth and repeat transactions, with buyers acquired last year purchasing more than twice the amount this year.

Core Businesses Performance: Mixed Results

The Cellulosic Fiber business saw a 1% YoY revenue increase to ₹4,149 crores, but EBITDA degrew 29% to ₹350 crores due to high input prices and cheaper imports from China. The Chemicals business achieved two-year high revenues, with Specialty Chemicals contributing 30% (up from 26% in Q2 FY25) and growing 34% YoY, though profitability was impacted by softening global caustic prices and elevated raw material costs. Cement business (UltraTech) sales volume grew 6.9% YoY to 33.85 million tons, with EBITDA per metric ton up 32% YoY to ₹966.

Capital Allocation and Debt Management

Grasim outlined a capex outlay of ₹2,263 crores for FY26, with ₹941 crores deployed in H1 FY26. The total capex for the Paints business stood at ₹9,727 crores as of September 30, 2025, with other projects like Lyocell expansion and Chemicals (CPVC, ECH) on track. On the balance sheet, net debt declined by ₹292 crores to ₹6,861 crores as of September 30, 2025, bringing the net debt to TTM EBITDA ratio down to 2.19x from 2.41x in the previous quarter.

Leadership Transition in Birla Opus and Strategic Continuity

Mr. Rakshit Hargave, CEO of Birla Opus, resigned effective December 6, 2025, to pursue other opportunities. Management stated that this is a natural phase of professional growth and will not impact the business or its growth strategy, which remains committed to achieving the number two position and profitability within three years of full-scale operations. The Managing Director, Himanshu Kapania, who has overseen the paints business for five years, will directly manage it until a new CEO is appointed.

Sustainability and Renewable Energy Focus

Grasim's Birla Cellulosic Fiber division received the highest rating of 'Dark Green Shirt' for the sixth consecutive year, reflecting its strong focus on sustainability. The company aims to continuously elevate its sustainability performance by improving the capacity share of renewable energy from the current 24-25% to 40% within the next three years. Additionally, increasing recycled water usage is a key thrust to reduce freshwater dependence, embedding resource efficiency into its operating model.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Construction Materials earnings calls