格拉西姆工业：新业务规模扩大值得称赞
2025A2026E315,632378,87816.0413.26312,841.0359,714.011,414.718,881.6 2027E435,83320.81407,987.028,978.0 Prateek Kumar * | Equity Analyst91 22 4224 6154 | prateek.kumar@jefferies.comRaghav Malik * | Equity Associate91 22 4224 6316 | rmalik1@jefferies.com The Long View: Grasim IndustriesInvestment Thesis / Where We DifferCapacity expansions in VSF and caustic soda segments to boost volumegrowth in FY24 and FY25. Despite the aggressive capex, the companyhas been able to sustain a strong balance sheet and is now also eyeingleading presence in paints. It is present in cement segment through India’slargest cement company, UltraTech. With sustained pickup in standalonesegments, the Holdco discount is likely to decline from the current rangeof 40-50%.Base Case,INR3280, +23%Inour base case,we estimate VSF/Causticvolume CAGR at 13%/18% over FY25-FY27, andVSF EBITDA/T at ~Rs18k and Chemical EBITDAmargin at 14-15% for FY26/FY27. We build Paintlosses to moderate after peaking in FY25. OurSOTP valuation for Grasim is Rs3,280 in basecase (35% holdco discount on subsidiaries).Sustainability MattersTop Material Issue(s):VSF fiber manufacturing is a key manufacturing segment for Grasim, and the fiber industry will have tochange to meet the ecological and social demands of the future. Grasim operates a sustainable valuechain, led by one of the most biodegradable products, with negligible end-of-life footprint, sustainablesourcing, and environment-friendly processes. For the Chemical segment, Power & Fuel are key rawmaterials and a determinant of the carbon footprint of manufacturers, which needs to be appropriatelyaddressed by the manufacturers.Company Target(s): 1)VSF business has set a target of Net Zero emissions across all operations by2040 and to reduce GHG emissions intensity to half by 2030.2)Water reduction target for both VSFand Chemical segments.3)Target for higher renewable energy mix in Chemical manufacturing.4)EUBAT to be implemented at all sites by 2025; currently only at Vilayat unit.Qs to Mgmt: 1)What is the roadmap to reducing carbon footprint and Net Zero in the VSF operations?2)How much Capex do you plan to put towards meeting GHG targets and the rollout of EU BATtechnology?Please see important disclosure information on pages 10 - 16 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. Upside Scenario,INR3700, +39%In our upside scenario, we estimate VSF/Causticvolume CAGR at 20%/30% over FY25-FY27e, andVSF EBITDA/T at ~Rs25k and Chemical EBITDAmargin at 17-19% for FY26/FY27. We build Paintlosses to sharply moderate after peaking inFY25. Our SOTP valuation for Grasim is Rs3,700in upside scenario (20% holdco discount onsubsidiaries). Downside Scenario,INR2200, -17%In our downside scenario, we estimate VSF/Caustic volume CAGR at 5% over FY24-FY27e,and VSF EBITDA/T at ~Rs18-20k and ChemicalEBITDA margin at 12-15% for FY26/FY27. Webuild Paint losses to remain elevated over FY26-FY27. Our SOTP valuation for Grasim is Rs2,200in downside scenario (55% holdco discount onsubsidiaries).CatalystsPositive•Steady rampup in the paint business•Company is developing production capacityfor chlorine VAPs to increase captive chlorineconsumption mix in the medium term, whichwill improve EBITDA profile for Chemicals•Improvement in balance sheet strengthwithincreased operating cash from newbusinesses.Negative•Demand slippage due to unexpected globalslowdown.•Company unable to scale up the paintbusiness•Sustained increase in energy prices. 2 Exhibit 3 - 4QFY25 Standalone result summary.(Rs mn)RevenueExpenditureEBITDAOther incomeInterestDepreciationPBTTaxAdj PATEBITDA margin (%)FDEPS (Rs)Source: Company, JefferiesExhibit 4 - Segmental Highlights.(Rs mn)RevenueFiberVSFVFYChemicalOthersTextilesInsulatorB2B EcomPaintsEBITDAFiberVSFVFYChemicalOthersTextilesInsulatorPaints/B2B/OthersMargins %FiberChemicalVolumesVSFVFYChemicalSource: Company; JefferiesExhibit 5 - Quarterly VSF volume trend.40,00080,000120,000160,000200,000240,000Q1FY17Q2FY17Q3FY17Q4FY17Q1FY18Q2FY18Q3FY18Q4FY18(mt)Source: Company, JefferiesPlease see important disclosure information on pages 10 - 16 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. Exhibit 7 - Chemicals quarterly volume trend.40,00080,000120,000160,000200,000240,000280,000Q1FY17Q2FY17Q3FY17Q4FY17Q1FY18Q2FY18Q3FY18Q4FY18(mt)Source: Company, JefferiesExhibit 9 - VSF Quarterly Realisation trend.040,00080,000120,000160,000200,000Q1FY17Q2FY17Q3FY17Q4FY17Q1FY18Q2FY18Q3FY18Rs/TonSource: Company, JefferiesExhibit 11 - VSF realisation growth trend YoY.-30.0-20.0-10.00.010.020.030.040.050.0Q1FY18Q2FY18Q3FY18Q4FY18Q1FY19Q2FY19Q3FY19Q4FY19YoY growth (%)Source: Company, JefferiesExhibit 13 - Chemicals realisation growth trend YoY.-40.0-20.00.020.040.060.080.0Q1FY18Q2FY18Q3FY18Q4FY18Q1FY19Q2FY19Q3FY19Q4FY19YoY growth (%)Source: Company, JefferiesPlease see important disclosure information on pages 10
