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Motilal Oswal Report
Grasim Industries Ltd. reported a very weak Q1 FY21 result due to the double whammy of a weak business cycle and the impact of Covid-19. While volumes have largely recovered this quarter, the margin is expected to remain weak.
Grasim’s standalone operations were impacted by Covid-19-induced lockdown, which dried up domestic demand, particularly for viscose staple fiber and chemicals. Standalone revenue declined 61% YoY to Rs 19.4 billion (our estimate Rs 20.8 billion) due to the impact of Covid-19 on demand.
Revenue fell by 78% YoY to Rs 5.6 billion in VSF and approximately 53% YoY to Rs 7.0 billion in Chemicals.
Reported Ebitda loss stood at Rs 1.45 billion versus profit of Rs 8.43 billion in Q1 FY20. The VSF segment reported Ebitda loss of Rs 1.13 billion, whereas chemicals reported Ebitda of Rs 410 million.
The Fertilizer business reported Ebitda of Rs 720 million, up approximately 40% YoY owing to fixed cost reduction, one-time gains related to freight arrears (Rs 120 million), and better PURAK sales (up 10% QoQ).
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