Grasim Industries share price falls 3% as Q2 margin outlook weighs

Grasim Industries Ltd.’s share price came under pressure on Thursday after the company reported its April-June quarter (Q1FY27) results. The company’s results noted that margins are expected to be lower in Q2 due to higher-cost raw material inventory and increased advertisement expanses.

 

As of 11:34 AM, the company’s share price was trading 1.76 per cent lower at ₹3,249.80  apiece; meanwhile, Nifty 50 was trading 0.37 per cent lower at 24,346.45. Intraday, the stock fell 3.2 per cent to ₹3,201.

 

Grasim Industries reported a 38.8 per cent rise in consolidated net profit at ₹3,846.28 crore for the June quarter of FY27, compared to a net profit of Rs 2,770.63 crore for April-June FY26.

 

 

Revenue from operations of Grasim Industries was up 21.43 per cent to ₹48,716.20 crore in the June quarter FY27. The company noted that its Ebitda was the highest-ever at ₹8,077 crore, up 26 per cent Y-o-Y.

 

Meanwhile, total expenses were 19.62 per cent higher in the June quarter to Rs 43,851.12 crore.

 

Brokerage firm Motilal Oswal Financial Services noted that Grasim’s Q1FY27 operating performance was above its estimates, driven by lower-than-estimated losses in the paint business as it benefitted from lower-cost inventory and lower advertisement expenses. 

 

MOFSL highlighted that management’s indication was to remain focused on market share gains in the paint business. Margin is expected to be lower in 2Q due to higher-cost raw material inventory and increased advertisement expenses, which would be partly offset by the price hike taken in Q1. In B2B e-commerce, Grasim is confident of achieving breakeven by FY27 end.

 

MOFSL expects FY27 earnings to be better than earlier estimated, mainly because the company performed strongly in Q1. So, it has increased its FY27 Ebitda estimate by 8 per cent and EPS estimate by 4 per cent.

 

However, for FY28, MOFSL has reduced its Ebitda estimate by 4 per cent and EPS estimate by 7 per cent. Despite this, MOFSL remains positive on the stock and maintains a ‘Buy’ rating. Its target price is ₹3,800.

   

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