Grasim reports 76% profit growth in Q4 due to write-back of tax provision

Aditya Birla Group flagship Grasim, which is into chemicals and staple fibre business besides being a holding company for several other firms including Ultratech Cement and the financial services business, reported strong revenue and profit growth last quarter boosted by a write-back of tax provision.

Grasim’s standalone profit after tax from continuing operations rose 75.5% to Rs 813.6 crore for the quarter ended March 31, 2022, over the year-ago period. On a sequential basis, net profit rose 66% from Rs 489 crore in Q3.

Actual net profit after factoring in numbers from discontinued operations more than doubled to Rs 1,068 crore.

The company’s consolidated net profit from continuing operations, which includes numbers from cement major Ultratech and other units, rose 43% to Rs 2,431 crore for the fourth quarter.

Analysts were expecting a muted performance in standalone net profit for the company with estimates pegging it to fall in the Rs 480-525 crore bracket.

The profit after tax was boosted by favourable decisions about previous years’ tax payments and the company wrote back tax provision amounting to Rs 320.61 crore, besides deferred tax credit.

At the same time, the company also posted robust topline growth. Standalone net sales rose 45% to Rs 6,376 crore in the quarter on a year-on-year basis and 10.2% on a sequential basis. This was at the upper end of the estimates of Rs 6,200-6,400 crore range that brokerage houses were projecting for the company.

Grasim shares slipped 3.72% in a weak Mumbai market on Monday and were quoting at Rs 1,402.67 apiece at the close of the trading session. The company declared its financials after trading stopped for the day.

Other Key Highlights

1) Standalone EBITDA declined to Rs 840 crore from Rs 963 crore in Q3 and Rs 880 crore in the year ago period.

2) The company benefited from strong growth in the global demand for textile products in the US and Europe as also its domestic market.

3) Viscose business (fibre and yarn) grew 46% to Rs 3,766 crore from Rs 2,583 crore in Q4 FY21.

4) Chemicals business grew even faster with 69% rise to Rs 2,486.52 crore during the quarter.

5) Earnings were boosted largely because of chemicals unit that reported almost fourfold rise in segment profit.

6) Viscose business reported pressure on margins with segment profit shrinking by over 80% in the same period.