Grasim Industries released their third quarter (Q3) results, which were not good as expected. The company incurred a loss of Rs 169 crore in this quarter, compared to Rs 236 crore in the same period last year.
However, on an annual basis, the company’s revenue increased by 26.9% to Rs 8,120 crore, which is higher than the previous year’s Rs 6,400 crore. But Ebitda (earlier earlier before interest, tax, depreciation and refinement) fell 48.2% to Rs 270.6 crore, which was Rs 522.6 crore in the same quarter last year.
Due to this weak performance, Grasim’s stock went to the red mark, and it came to the radar of brokerage houses. Jefferies have given the opinion of shopping, while Morgan Stanley has given it a ‘equal weight’ rating.
Grasim Share Price Performance
Stock price on market closure: ₹ 2,473.25 (0.58% fall)
52 weeks highest level: ₹ 2,877.75
52 week minimum level: ₹ 1,733.25
The company’s weak results led to a decline in the stock, but some analysts consider it a good opportunity for long -term investment.
Brokerage Views on Grasim
Jefferies on Grasim – “Shopping Advice”
Target Price: ₹ 3,150
Rating: Bulish
According to jefferies:
- Ebitda was less than expected, which led to pressure in stock.
- VSF (Viscose Staple Fiber) is performing weakly, which affected the profits.
- Revenue increased by 52% from new businesses.
- Paint capex (Capital Expenditor) reached 90%, increasing the debt.
Jefferies’ opinion: The current decline can give a chance to purchase, as the new business can benefit the company in future.
Morgan Stanley on Grasim – “Equal Weight Rating”
Target Price: ₹ 2,950
Rating: neutral (balanced investment approach)
According to Morgan Stanley:
- Q3’s Ebitda was less than anticipated.
- There was a good demand in the paint segment, which keeps expectation.
- Caustic Soda Sales Volume increased by 1% on an annual basis.
- The sales of Caustic Soda were 4% higher than estimated.
- The company is expanding its product portfolio, causing future growth.
Morgan Stanley’s opinion: Stock will remain stable and investors can hold it for long term.
Invest in Grasim or not?
Positive Factors:
26.9% increase in revenue, which is a good sign for the future.
Paint segment and new business boom.
The target of brokerage firms more than the current price.
Negative Factors:
Heavy decline in ebitda and margin.
Increase in debt, which may increase short -term pressure.
The stock has fallen from the last highest level.
What to do?
If you are a long -term investor, you can shop in the fall.
For the short term, keep an eye on the volume and quarterly results.
Decide investment on the basis of risk-tolerance, as there may be ups and downs in the near future.
