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Grasim----------------------------------------------------------------------------Maintain OUTPERFORM
New Report: 3Q11 - VSF continues to provide good support, margins contract
● Grasim reported 3Q FY11 standalone PAT of Rs2.8 bn, up
8% YoY and 3% lower than estimated due to lower other income
and higher tax provisioning. Consolidated PAT after minorities
stood at Rs5 bn, declining 14% YoY and was 2% below estimates.
● VSF revenue went up 17% YoY on the back of higher volumes
and realisations. Margins, however, were down 757 bps YoY due
to a sharp increase in input costs. In the cement business,
revenue was up 9% YoY and margins declined 855 bps YoY.
● Grasim has overall capex plans of over Rs135 bn over the next
three years. Rs34 bn is expected to be spent on the VSF and
chemicals business and the rest in the cement business. Grasim
incurred Rs3 bn capex in 3Q FY11, taking 9M11 total capex to
Rs8.9 bn. Rs24 bn capex for FY11 as planned appears difficult to
achieve.
● We update our model for the latest coal cost assumptions and
expect higher VSF realisations ahead. We roll forward our model
to Mar-12 and our target price for Grasim increases to Rs2,604
(from Rs2,261 earlier). We maintain our OUTPERFORM.
Results marginally lower than estimates
Grasim reported 3Q FY11 standalone PAT of Rs2.8 bn, up 8% YoY
and 3% lower than our estimates due to lower-than-expected other
income and higher tax provisioning. Consolidated PAT after minorities
stood at Rs5 bn, declining 14% YoY and was 2% below estimates.
The consolidated EBITDA margin declined 812 bps YoY to 20.8% and
was in line with estimates.
Strong VSF volumes and realisations, margins contract
Grasim’s VSF revenue went up 17% YoY on the back of higher
volumes and realisations. VSF volumes were up 4% YoY whereas
realisations went up 12% YoY. Margins, however, fell 757 bps YoY
due to a sharp increase in input costs. In the cement business,
revenue was up 9% YoY; however, margins declined 855 bps YoY.
The VSF business contributed 34% to consolidated EBITDA
compared to 28% in 3Q FY10.
Capex plans of over Rs135 bn over the next three years
Grasim has overall capex plans of over Rs135 bn over the next three
years. Rs34 bn is expected to be spent in the VSF and chemicals
business and Rs56 bn is earmarked for a 9.2 mn tonne cement
capacity expansion in Ultratech. Another Rs46 bn shall be spent on
the modernisation and upgradation of existing cement plants. Grasim
incurred Rs3 bn capex in 3Q FY11 taking 9M FY11 total capex to
Rs8.9 bn. Rs24 bn capex for FY11 as planned earlier appears difficult
to achieve.
Raising target price to Rs2,604, revising estimates
We update our model for the latest coal cost assumptions, and expect
higher VSF realisations ahead. Consolidated EPS for Grasim declines
by 7% for FY11, as margins are expected to be lower. We roll forward
our model to Mar-12 and our target price for Grasim stands at
Rs2,604 (from Rs2,261 earlier). We maintain our OUTPERFORM.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Grasim----------------------------------------------------------------------------Maintain OUTPERFORM
New Report: 3Q11 - VSF continues to provide good support, margins contract
● Grasim reported 3Q FY11 standalone PAT of Rs2.8 bn, up
8% YoY and 3% lower than estimated due to lower other income
and higher tax provisioning. Consolidated PAT after minorities
stood at Rs5 bn, declining 14% YoY and was 2% below estimates.
● VSF revenue went up 17% YoY on the back of higher volumes
and realisations. Margins, however, were down 757 bps YoY due
to a sharp increase in input costs. In the cement business,
revenue was up 9% YoY and margins declined 855 bps YoY.
● Grasim has overall capex plans of over Rs135 bn over the next
three years. Rs34 bn is expected to be spent on the VSF and
chemicals business and the rest in the cement business. Grasim
incurred Rs3 bn capex in 3Q FY11, taking 9M11 total capex to
Rs8.9 bn. Rs24 bn capex for FY11 as planned appears difficult to
achieve.
● We update our model for the latest coal cost assumptions and
expect higher VSF realisations ahead. We roll forward our model
to Mar-12 and our target price for Grasim increases to Rs2,604
(from Rs2,261 earlier). We maintain our OUTPERFORM.
Results marginally lower than estimates
Grasim reported 3Q FY11 standalone PAT of Rs2.8 bn, up 8% YoY
and 3% lower than our estimates due to lower-than-expected other
income and higher tax provisioning. Consolidated PAT after minorities
stood at Rs5 bn, declining 14% YoY and was 2% below estimates.
The consolidated EBITDA margin declined 812 bps YoY to 20.8% and
was in line with estimates.
Strong VSF volumes and realisations, margins contract
Grasim’s VSF revenue went up 17% YoY on the back of higher
volumes and realisations. VSF volumes were up 4% YoY whereas
realisations went up 12% YoY. Margins, however, fell 757 bps YoY
due to a sharp increase in input costs. In the cement business,
revenue was up 9% YoY; however, margins declined 855 bps YoY.
The VSF business contributed 34% to consolidated EBITDA
compared to 28% in 3Q FY10.
Capex plans of over Rs135 bn over the next three years
Grasim has overall capex plans of over Rs135 bn over the next three
years. Rs34 bn is expected to be spent in the VSF and chemicals
business and Rs56 bn is earmarked for a 9.2 mn tonne cement
capacity expansion in Ultratech. Another Rs46 bn shall be spent on
the modernisation and upgradation of existing cement plants. Grasim
incurred Rs3 bn capex in 3Q FY11 taking 9M FY11 total capex to
Rs8.9 bn. Rs24 bn capex for FY11 as planned earlier appears difficult
to achieve.
Raising target price to Rs2,604, revising estimates
We update our model for the latest coal cost assumptions, and expect
higher VSF realisations ahead. Consolidated EPS for Grasim declines
by 7% for FY11, as margins are expected to be lower. We roll forward
our model to Mar-12 and our target price for Grasim stands at
Rs2,604 (from Rs2,261 earlier). We maintain our OUTPERFORM.
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