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    Grasim Inds

    GRASIMStrong
    Construction Materials·23 May 2024
    Management Summary

    Grasim delivered record FY24 financials across all key metrics while simultaneously launching the Birla Opus paints business. Three plants commenced commercial production in April 2024 with overwhelmingly positive dealer and contractor feedback on product quality. Chemical business saw range-bound pricing with chlorine derivatives weakness from agrochemical downturn. The AV Terrace Bay impairment eliminated ongoing JV losses going forward.

    Highlights

    8

    • Highest ever consolidated revenue of ₹1,30,978 crores and EBITDA of ₹20,837 crores for FY24

    • Highest ever sales volumes in cement, cellulosic fibre and caustic soda businesses

    • Birla Opus launched with commercial production at 3 plants (Cheyyar, Panipat, Ludhiana) from April 29, 2024

    • Target of 50,000 dealers and 150 depots in FY25; dealer recruitment front-loaded in H1

    • Birla Pivot crossed ₹1,000 crores revenue in first full year; monthly run rate ~₹200 crores

    • One-time charge of ₹716 crores standalone for AV Terrace Bay (Canada JV) impairment and closure

    • Cement capacity reached 146.2 MTPA; targeting 200+ MTPA by FY27

    • FY25 standalone CAPEX guided at ~₹4,500 crores, mainly for remaining paints investment

    What Changed2

    vs Q2 FY25

    Tone shiftGood → StrongRisks discussed5 → 4 (-1)
    Key financials

    Metrics

    4

    Periods

    2

    Headline

    1
    • AV Terrace Bay Impairment
      ₹716 Cr

    FY24

    3
    • Consolidated Revenue
      ₹1.31L Cr
    • Consolidated EBITDA
      ₹20,837 Cr
    • Consolidated CAPEX
      ₹20,199 Cr

    Segment breakdown

    Cement (UltraTech)
    85% Utilization11% Volume Growth FY24140 MTPA Domestic Capacity146.2 MTPA Global Capacity
    Cellulosic Fibres
    2,08,000 tons Q4 Volume95% Utilization35% Captive Pulp Procurement
    Chemicals
    3,08,000 tons (record) Q4 Caustic Volume-3,550 Rs per ton (negative) Chlorine Realization Q414% Epoxy Volume Growth QoQ
    Birla Opus (Paints)
    1,332 Mn Installed Capacity3 plants (April 2024) Plants Commissioned
    Birla Pivot (B2B E-commerce)
    ₹1,000 Cr FY24 Revenue₹200 Cr Monthly Run Rate
    Financial Services (ABC)
    31% Lending Portfolio Growth₹1.2L Cr Lending Portfolio₹4.4L Cr AUM
    List

    Guidance & targets

    5
    CategoryTargetPriority
    Paints
    Market share exit FY25
    High single-digit market share by March 2025
    		High
    Paints
    Revenue target at full-scale (3 years)
    ₹10,000 crores with profitability
    		High
    Paints
    Dealer and depot targets FY25
    50,000 dealers and 150 depots
    		High
    B2B E-commerce
    Revenue target
    $1 billion in next 3 years
    		High
    Capex
    FY25 standalone CAPEX
    ~₹4,500 crores (mainly paints remaining investment)
    		High

    Risks & concerns

    8
    RiskSeverity

    AV Terrace Bay impairment of ₹716 crores on Canada JV

    One-time charge for equity impairment (₹280 crores) and estimated exposure (₹436 crores). JV operations stopped; exploring exit. No future losses to consolidate. — Management acknowledged

    medium

    Chlorine derivatives profitability impacted by agrochemical demand weakness

    CTC, methylene chloride under pressure due to struggling agro-chem industry. Chlorine negative at ₹3.5-3.6 per unit in Q4, worsened from Q3. — Both acknowledged

    medium

    Chinese overcapacity in chemicals affecting global pricing

    China's weak domestic consumption driving chemical exports globally. Range-bound pricing expected to persist for 1-2 quarters minimum. — Management acknowledged

    medium

    Paint business to incur significant P&L charges from FY25 as plants commercialize

    Employee costs, marketing and branding investment all expensed from April 2024. First year of operations expected to be heaviest investment year. — Management acknowledged

    low

    Areas of Evasion(4)

    • Tinting machine numbers
    • Paint revenue specifics
    • CWIP capitalization quantum
    • Birla Pivot detailed financials

    Q&A highlights

    3

    “if you look at the total package at the dealer and contractor end, we would be about 7%-7.5% better than the market. And if you work out on the 10% for the volume, that's how it turns out to be”

    Quantifies Birla Opus competitive advantage at dealer level; 7-7.5% better ROI for dealers plus 10% volume free for consumers creates multi-stakeholder pull

    asked by Percy Panthaki (IIFL Securities)

    2 min read4 chapters

    Detailed Narrative

    01

    Birla Opus Launch: Strong Start with Ambitious Targets

    Three plants at Cheyyar, Panipat and Ludhiana commenced commercial production on April 29, 2024 with total installed capacity of 1,332 million liters across all 6 planned plants. Initial dealer and contractor feedback on product quality described as 'unanimously excellent' across all segments. Management targets 50,000 dealers (front-loaded recruitment in H1) and 150 depots by FY25 end, with high single-digit market share exit. The 10% free volume offer on emulsions and 7-7.5% better dealer economics vs market leader form the commercial backbone.

    02

    Record FY24 Performance Across Core Businesses

    Grasim achieved highest ever consolidated revenue of ₹1,30,978 crores and EBITDA of ₹20,837 crores in FY24 with record volumes across cement, cellulosic fibre and caustic soda. Cement utilization at 85% (vs industry 71%) with 11% volume growth (vs industry 7-8%). VSF at 95%+ utilization. Consolidated capex of ₹20,199 crores with 83% into growth capex. Over ₹38,000 crores invested in growth capex over past 5 years.

    03

    Chemical Business: Navigating Cyclical Trough

    Caustic soda achieved record quarterly sales volume of 308,000 tons in Q4 with prices gradually recovering for three consecutive quarters. However, chlorine derivatives profitability was subdued due to agrochemical demand weakness, with chlorine negative at ₹3.5-3.6. Epoxy new plant commissioned in December 2024 with 14-15% sequential volume growth; expected 24-36 months for full ramp-up. ECH project commissioning in FY25 will provide 80% integration. Land acquired and engineering started for doubling ECH capacity at Vilayat.

    04

    New Growth Engines: B2B E-commerce and Strategic Initiatives

    Birla Pivot crossed ₹1,000 crores in first full year of operations with monthly run rate of ~₹200 crores. Launched private labels in tiles and plywood. Targeting $1 billion revenue in 3 years. Sustainability-linked NCDs of ₹1,250 crores issued with IFC investment. Rights issue first call raising ₹1,000 crores. Textiles retail hit highest ever ₹580 crores with Linen Club at 230 EBOs. Renewable capacity on track for 2 GW by FY25.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.