Grasim tanks on 'surprise' loss

about 29 days ago
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Grasim Industries shocked marketmen by posting a surprise loss for Q2FY19 but this is on account of a one-time exceptional loss; barring this loss, the operational performance remains quite good. The market has reacted very strongly to this performance, going down almost 9% to Rs.800.30; it has recovered from there to Rs.815 levels but figures in the top five losers on the BSE.

Grasim posted a consolidated net loss of Rs.1300 crore mainly on account of the exceptional loss of Rs.2003 crore. This was the difference between book value and fair value of Vodafone Idea Ltd as on August 30, 2018. This has been charged to the Profit and Loss Account, consequent to Vodafone Idea Ltd ceasing to be an Associate.

With merger of Vodafone India with Idea Cellular into Vodafone Idea, Idea's share in profit of VIL has not been consolidated with effect from August 31 2018.

Barring this one-time loss, the performance is actually good. Its consolidated revenue for the quarter rose 24% at Rs.16,795 crore with EBITD being flat, showing a growth of 1% at Rs.2854 crore.

If we do not take into account exceptional item, it has posted  a net profit of Rs.626 crore, up2% (YoY).

Its viscose segment reported best ever quarterly performance with record production of 137KT and highest ever domestic sales of 114KT (92KT Q2FY18). EBITDA was up by 23% despite increase in input cost.

Caustic Soda reported second successive quarter of double digit jump of 17% YoY in production and sales volume.  EBITDA was up by 60% YoY, supported by higher ECU realization and sales volume.

Pulp did not do too well as production was impacted by plant disturbances at AVTB  and rise in the input cost pressure, reporting a 11% rise in topline but EBIDTA was down 26%.

In cement, Ultra Tech did well with a 20% rise in revenue and EBITDA remained flat.

Advice from our Editor SP Tulsian, post this performance – “Core numbers are seen quite good. This will show some weakness today but is not considered to be a big negative. One can buy at every fall.”

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