A worker moves large spools of rayon yarn in the spinning area at a factory. (Photographer: Dadang Tri/Bloomberg)

Q1 Results: Grasim Reports Highest Quarterly Profit In Nearly Nine Years

Grasim Industries Ltd. reported its highest quarterly profit in nearly nine years, surpassing estimates.

Net profit during the April-June period stood at Rs 642.5 crore, a rise of 85 percent from the year-ago period, the Aditya Birla group's firm said in a stock exchange notification today. That compares with the Rs 519-crore consensus estimate of analysts surveyed by Bloomberg. The reported quarterly profit was the highest in 35 quarters and rose at the fastest pace in two years, according to data compiled by Bloomberg.

Revenue rose 74.8 percent on a yearly basis to Rs 4,789 crore. The analysts had forecast Rs 4,573 crore. Operating income or the earnings before interest, tax, depreciation and amortisation rose 90 percent on a yearly basis to Rs 1,054 crore. Operating margins too rose to 20 percent from 20.3 percent in the year-ago period.

Dilip Gaur, managing director of Grasim Industries, told BloombergQuint that the sales of caustic soda and chlorine helped the company’s chemical business post higher margins. “Cost management in the viscose staple fibre business has given us a better margin realization, he said. “Volumes have increased due to de-bottlenecking, reducing the capital cost per tonne.”

The subsidiary of the Aditya-Birla Group had approved a capital expenditure of Rs 1,100 crore for the current fiscal. “As of June 2018, we have net surplus cash of over Rs 700 crore,” said Sushil Agarwal, chief financial officer of Grasim Industries. “We can support capital expenditure out of our internal generation itself.”

Agarwal said that the company expects to generate a free cash flow of around Rs 2,800 crore by the end of current fiscal.

Shares of Grasim Industries rose as much as 1.8 percent to Rs 1,004 apiece after the announcement of results. The stock has declined 14.6 percent so far this year.