THE BEST STOCK

TO ADD TO
YOUR PORTFOLIO
THIS MONTH
IS HERE!
SEPTEMBER 2021
GRASIM INDUSTRIES LTD We analyze 4000 stocks; we
choose around 50 and out of that
we give you the best stock to
invest every month. We will also
tell you when you need to sell and
book profits. So, you will get 1
stock every month, totaling to 12
stocks every year and active selling
advice on them.

SO HOW DO WE
CHOOSE THIS STOCK?

➢ Shortlisting basis our top Mojo

Scores
➢ Doing detailed Investment Case
➢ Looking at the future of this
company and sector
➢ Single focus on maximizing
returns with minimal risk

9th Sep 2021

- By research team
(research@marketsmojo.com)
This report has been created by www.marketsmojo.com exclusively for Mojo Professional Subscribers. You may not
WWW.MARKETSMOJO.COM
copy, reproduce, distribute, publish, display, perform, modify, create derivative works, transmit, or in any way exploit any
such content. Unauthorized usage is an infringement of our intellectual property rights and a violation of law and it may
also result in cancellation of subscription without any refund and may lead to legal action.
 STOCK OF THE MONTH
GRASIM INDUSTRIES LTD

CMP Rs. 1,597.80 WHO SHOULD BUY

Price as of 9th September 2021
Risk Appetite Medium Risk
Decision STRONG BUY Expectations High Return

SUMMARY Portfolio Sector Exposure <30% (Cement)

• Grasim belongs to the reputed business house of Aditya Birla group. If sector exposure > 30%, use Portfolio Optimizer tool
• Grasim is the largest caustic soda manufacturer in the country.

• Caustic soda prices, which were subdued, has started moving up in

STOCK INFO
the last one and half months.
BSE 500300
• At the same time, VSF prices that have taken a beating are likely to NSE GRASIM
stabilize.
Large Cap (Rs. 1,03,362
Market Cap
• The gap between cotton and VSF has increased, which augurs well for Cr.)
the VSF as customers can move from cotton to VSF.
Sector Cement
• Many of the company’s capex going are on stream in the next 18 52 w L/H (Rs.) 664.80/1614.35
months that will expand its top line as well as the bottom line.
Average Vol (6M) 966.90 Lakhs
• UltraTech Cement and Aditya Birla Capital are subsidiaries of the
company. Grasim stake in these two companies is worth Rs 1.50 lac Equity Capital (Rs.) 131.62 Cr
crore, against which its market cap is Rs 1.03 lac crore giving a huge
margin of safety. Book Value per share (Rs.) 652.60
• The company owns an 11.5 per cent stake in Vodafone Idea. The
improved sentiments on Vodafone Idea will help to improve the STOCK PERFORMANCE
intrinsic worth of the company.
Price as of 09th September 2021
• Aditya Birla capital subsidiary AMC business is going public that
would unlock the value for Grasim. Period 1M YTD 1Y 3Y
GRASIM INDUSTRIES
• The company is hopeful of completing its sale of fertilizer business to 5.62 72.35 133.02 55.97
Indo Rama in the next couple of months. The money coming in will
LTD (%)
help to reduce its borrowings. Sector Index (%) 5.10 53.03 98.96 65.69
• Net debt of the company stands at Rs 1817 crore (standalone). Sensex (%) 7.17 22.10 52.66 51.88
• The company is focusing more on value-added products with a target
to reach 40-50 per cent revenue from VAP in the next 2-3 years for
both chemicals and VSF business. KEY RATIOS
• In the past, Aditya Birla group company unlocked shareholders wealth PE ratio (TTM) 61.53
by offering shares of various businesses, and something similar can
happen in the future too for its cement and finance subsidiaries. PB ratio 1.59
• For the quarter ended June 2021, the company, on a standalone
Dividend Yield 0.57%
basis, reported sales of Rs 3,763 crore as compared to Rs 1,336 crore ROE (TTM) 7.11%
of June 2020-growth of 182 per cent.
ROCE (TTM) 13.72%
• The company for June quarter reported a net profit of Rs 482 crore as D/E 0.64
compared to a loss of Rs 225 crore for the same quarter of the
previous year. EPS (TTM) 25.53
EPS (diluted) (TTM) 25.53
• Our technical indicators suggest the bullish trend.

9th Sep 2021

- By research team
(research@marketsmojo.com)
1
This report has been created by www.marketsmojo.com exclusively for Mojo Professional Subscribers. You may not
WWW.MARKETSMOJO.COM
copy, reproduce, distribute, publish, display, perform, modify, create derivative works, transmit, or in any way exploit any
such content. Unauthorized usage is an infringement of our intellectual property rights and a violation of law and it may
also result in cancellation of subscription without any refund and may lead to legal action.
 Stock of the Month: GRASIM INDUSTRIES LTD
INVESTMENT ARGUMENT
This time again, we have picked up another company from Aditya Birla group company as stock of the month. We
believe various levers will help the company improve its market cap.

Let me touch upon the six levers that makes me bullish on the company.

1. The company is the largest producer of Caustic Soda in the country. The caustic soda prices have moved up
from 22,000 to 32,000 per tonne in the last one and half months.
2. At the same time, it's another division VSF, whose prices were falling in the first quarter, has now stabilized.
With the price gap between cotton and VSF increasing, suggesting that many customers may switch from
cotton to VSF that will boost demand for the company's product
3. Many of the company's capex will go on stream in the next 18 months, which will help improve its top line
and bottom line.
4. The company, the last November, had announced its sale of the Urea plant to Indo Rama group. In all
likelihood, this sale will get completed in the next couple of months. The company will use the proceed to
reduce the debt bringing down interest costs.
5. Grasim is the holding company for the Ultratech Cement and Aditya Birla Capital. The worth of the stake is at
Rs 1.50 lac crore, while its market cap is mere Rs 1 lac crore. In other words, its own business is virtually
going free. The stake gives a great margin of safety.
6. It also owns an 11.5 per cent stake in the Vodafone Idea, and there are indications that Vodafone Idea will
get government support. The price of Vodafone Idea has improved in the last one month or so.

Grasim is mainly into two business segments-VSF and Chlor Alkali businesses. It does have other two businesses-
textiles and Insulators, but there are relatively small.
VSF business is the largest business in terms of sales, where the company also manufactures VFY. While in Chlor
Alkali, it manufactures Caustic Soda and Chlorine. It has Epoxy resin capacity too.

As part of the strategy, the company wants to derive more revenue from the value-added products. For June 2021,
VFY business had 26 per cent of the revenue from VAP compared to 22 per cent for the entire FY21. The company
has now set an ambition to increase to 40-50 per cent in the next couple of years. The company is expanding its
capacity of VSF by 40 per cent and chemical by 33 per cent. All these capacities would be ramped in a phased
manner and fully operational by FY23.

For the year ended March 2021, the company reported lower sales and net profit on a stand-alone basis than in
March 2020 as lockdown disrupted the business. For the first quarter ended June 2021, the company reported
smarter growth in sales and net profit compared to June 2020, but lower numbers as compared to March 2021 as
both businesses VSF prices and caustic soda prices were subdued in the domestic market. But I believe that the
company should report smarter growth in the remaining three quarters as prices of VSF have stabilized while prices
of Caustic Soda has moved up. Also, its Vilayat (one of the units in Gujarat) would see VSF capacity going on stream
300 TPD in this quarter and another 300 TPD in the next quarter. These units will start contributing the revenue in the
current financial year. Also, 292K capacity of chemical would go on stream in the current financial year. These units
will bring down its cost and improve sales, helping to improve margins for the company.

While Grasim has announced a plan to go into the Paint business, this business is unlikely to contribute until FY24.
The company has just identified the land parcels, so setting up manufacturing facilities would take 24 months.
Hence, I have not considered any positive gain from this business while recommending the company.

But there are risk factors too. First, the company's revenue is a function of commodity prices, and hence any
fluctuation in commodity prices will hurt the company's financials. The company moving into Paint would need at
least Rs 5,000 crore. The company may need to borrow money to fund the same. This can increase its interest cost
in the interim, while revenue will come at a later stage. There is no guarantee that the paint business would be
successful. We need to wait and watch how the paint business ramp-up.
At present, Grasim has a score of 84. The company boast good quality with very positive Current Financial Trend. It's
trading at a Fair Valuation, and Technical indicators are bullish, suggesting upside.

We recommend buying on the counter.

9th Sep 2021

- By research team
(research@marketsmojo.com)
2
This report has been created by www.marketsmojo.com exclusively for Mojo Professional Subscribers. You may not
WWW.MARKETSMOJO.COM
copy, reproduce, distribute, publish, display, perform, modify, create derivative works, transmit, or in any way exploit any
such content. Unauthorized usage is an infringement of our intellectual property rights and a violation of law and it may
also result in cancellation of subscription without any refund and may lead to legal action.
 Stock of the Month: GRASIM INDUSTRIES LTD
Exhibit 1 Exhibit 2
GRASIM Industries Ltd. vs Benchmark (Returns) GRASIM Industries Ltd. Price Movement
Grasim Industries Returns (%) Sensex Returns (%) 1600

100% 1400

1200
60%
1000

800
20%
600

-20% 400

200
-60%

Jun 2019

Jun 2020

Jun 2021
Dec 2018

Mar 2019

Dec 2019

Mar 2020

Dec 2020

Mar 2021
Sep 2018

Sep 2019

Sep 2020

Sep 2021
Dec-18

Mar-19

Dec-19

Mar-20

Dec-20

Mar-21
Jun-19

Jun-20

Jun-21
Sep-18

Sep-19

Sep-20

Sep-21

Exhibit 3 Exhibit 4
Sales Growth - Standalone Gross Profit Margin - Standalone
Net Sales (Rs Cr.) QoQ Growth% 95.0%
91.0%
5,000 200% 90.1% 90.1%
157% 90.0% 89.1%
4,500
4,000 150%
3,500 85.0%
100%
3,000
19%
2,500 8% 50% 80.0% 77.8%
2,000 -14%
1,500 0%
1,000 75.0%
-50%
500
0 -69% -100% 70.0%
Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21

Exhibit 5 Exhibit 6
EBITDA Growth - Standalone EBITDA Margin - Standalone
EBITDA (Rs Cr.) QoQ Growth% 25.0%
19.7%
20.0% 17.4% 18.5%
1,000 62% 100%

50% 15.0% 11.6%

800
-9%
0% 10.0%
600 26%
-50% 5.0%
400
-100% 0.0%
200 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21
-150% -5.0%
-157%
0 -10.0%
-200%
Jun-20 Sep-20 Dec-20 Mar-21 Jun-21
-200 -250% -15.0%

-400 -276% -300% -20.0% -16.9%

9th Sep 2021

- By research team
(research@marketsmojo.com)
3
This report has been created by www.marketsmojo.com exclusively for Mojo Professional Subscribers. You may not
WWW.MARKETSMOJO.COM
copy, reproduce, distribute, publish, display, perform, modify, create derivative works, transmit, or in any way exploit any
such content. Unauthorized usage is an infringement of our intellectual property rights and a violation of law and it may
also result in cancellation of subscription without any refund and may lead to legal action.
 Stock of the Month: GRASIM INDUSTRIES LTD
Exhibit 7 Exhibit 8
PAT Growth - Standalone PAT Margin - Standalone
15.0% 11.9%
PAT (Rs Cr.) QoQ Growth% 10.5% 10.5%
9.0%
10.0%
600 100%
500 40% 5.0%
-4% 50%
400 0.0%
300 0% Jun-20 Sep-20 Dec-20 Mar-21 Jun-21
-5.0%
200 -8%
-50%
100 -10.0%

0 -100% -15.0%
-100 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21
-150% -20.0%
-200 -179%
-200% -25.0% -23.3%
-300
-400 -250% -30.0%
-216%

Exhibit 9
Variance Analysis - Standalone
Jun-21 Mar-21 Dec-20 Sep-20 Jun-20 Comments
Fallen QoQ by 14% and
Total Operating income 3,762.68 4,394.25 3,696.61 3,438.24 1,335.68
Grown YOY by 182%
Total Expenditure (Excl Fallen QoQ by 16% and
3,022.45 3,583.36 3,052.09 3,040.29 1,561.36
Depreciation) Grown YOY by 94%
Operating Profit (PBDIT) Fallen QoQ by 9% and
740.23 810.89 644.52 397.95 -225.68
excl Other Income Grown YOY by 428%
Fallen QoQ by 6% and
Other Income 64.92 69.15 63.76 282.41 99.22
YOY by 35%
Fallen QoQ by 9% and
Operating Profit (PBDIT) 805.15 880.04 708.28 680.36 -126.46
Grown YoY by 737%
Grown QoQ by 8% and
Interest 58.11 53.64 51.64 75.73 65.77
Fallen YOY by 12%
Depreciation 201.78 214.51 205.11 215.26 202.91
Fallen QoQ by 7% and
Profit Before Tax 545.26 588.63 451.53 389.37 -452.87
Grown YoY by 220%
Fallen QoQ by 21% and
Tax 99.32 125.59 120.77 29.15 -141.38
Grown YoY by 170%
Fallen QoQ by 4% and
Profit After Tax 445.94 463.04 330.76 360.22 -311.49
Exhibit 10 Grown YoY by 243%
Margins - Standalone
Jun-21 Mar-21 Dec-20 Sep-20 Jun-20 Avg. (4 Qtrs.) Comments
Higher than Average (4 Qtrs)
GPM 89.10% 90.11% 90.14% 91.00% 77.82% 87.27%
- Promising
Higher than Average (4 Qtrs)
OPM 19.67% 18.45% 17.44% 11.57% -16.90% 7.64%
- Promising
Higher than Average (4 Qtrs)
NPM 11.85% 10.54% 8.95% 10.48% -23.32% 1.66%
- Promising

9th Sep 2021

- By research team
(research@marketsmojo.com)
4
This report has been created by www.marketsmojo.com exclusively for Mojo Professional Subscribers. You may not
WWW.MARKETSMOJO.COM
copy, reproduce, distribute, publish, display, perform, modify, create derivative works, transmit, or in any way exploit any
such content. Unauthorized usage is an infringement of our intellectual property rights and a violation of law and it may
also result in cancellation of subscription without any refund and may lead to legal action.
 Stock of the Month: GRASIM INDUSTRIES LTD
Exhibit 11
*Revenue by Industry Practice – Jun 2021
Insulators
Textiles 2%
8%
Viscose business constitute 53% of the
entire composition

Viscose
Chemicals 53%
37%

Exhibit 12
Shareholding Snapshot
Insurance Companies
11.20%

Promoters
42.09% FIIs have increased holdings from 14.44%
Non-Institutions
26.82% to 15.10% in Jun 2021.

Other DII's
0.13%
Mutual Funds
4.62% FIIs
15.10%

COMPANY BACKGROUND
Grasim Industries, the flagship company of the Aditya Birla Group was incorporated on August 25,1947. It ranks among
India's largest private sector companies. Starting as a textiles manufacturer in 1948, today Grasim’s businesses
comprise viscose staple fibre (VSF), cement, chemicals and textiles. Its core businesses are VSF and cement, which
contribute to over 90 per cent of its revenues and operating profits.

The Aditya Birla Group is the world’s largest producer of VSF, commanding a 24 per cent global market share. It is also
the second largest producer of caustic soda (which is used in the production of VSF) in India.

In cement, Grasim through its subsidiary UltraTech Cement Limited has a capacity of 52 million tpa and is a leading
player in India. In July 2004, Grasim acquired a majority stake and management control in UltraTech. One of the largest
of its kind in the cement sector, this acquisition catapulted the Aditya Birla Group to the top of the league in India.

9th Sep 2021

- By research team
(research@marketsmojo.com)
5
This report has been created by www.marketsmojo.com exclusively for Mojo Professional Subscribers. You may not
WWW.MARKETSMOJO.COM
copy, reproduce, distribute, publish, display, perform, modify, create derivative works, transmit, or in any way exploit any
such content. Unauthorized usage is an infringement of our intellectual property rights and a violation of law and it may
also result in cancellation of subscription without any refund and may lead to legal action.
 Stock of the Month: GRASIM INDUSTRIES LTD
Our Past Stock of the Month Performance
May 2020 September 2020
ALEMBIC PHARMA DIVI’S LAB.
Closed
17.12% 60.03%

View Report View Report

June 2020 October 2020

COROMANDEL INTL. TCS
Closed
12.77% 34.70%

View Report View Report

July 2020 November 2020

BALKRISHNA INDUSTRIES ESCORTS

Closed
22.31% 1.54%
View Report View Report

August 2020 December 2020

TATA CONSUMER PRODUCTS EID PARRY (INDIA)

69.00% 23.07%

View Report View Report

9th Sep 2021
- By research team
(research@marketsmojo.com)
6
This report has been created by www.marketsmojo.com exclusively for Mojo Professional Subscribers. You may not
WWW.MARKETSMOJO.COM
copy, reproduce, distribute, publish, display, perform, modify, create derivative works, transmit, or in any way exploit any
such content. Unauthorized usage is an infringement of our intellectual property rights and a violation of law and it may
also result in cancellation of subscription without any refund and may lead to legal action.
 Stock of the Month: GRASIM INDUSTRIES LTD
Our Past Stock of the Month Performance
January 2021 May 2021
HCL TECHNOLOGIES LTD LAURUS LABS LTD

20.47% 34.58%

View Report View Report

February 2021 June 2021

SEQUENT SCIENTIFIC LTD LUX INDUSTRIES LTD
Closed
13.01% 22.05%
View Report View Report

March 2021 July 2021

ORIENT ELECTRIC LTD MOTIL.OSWAL.FIN.
SERVICES LTD.

19.49% -20.46%

View Report View Report

April 2021 August 2021

VAIBHAV GLOBAL LTD HINDALCO

INDUSTRIES LTD
Closed
-6.33% 6.54%
View Report View Report
9th Sep 2021
- By research team
(research@marketsmojo.com)
7
This report has been created by www.marketsmojo.com exclusively for Mojo Professional Subscribers. You may not
WWW.MARKETSMOJO.COM
copy, reproduce, distribute, publish, display, perform, modify, create derivative works, transmit, or in any way exploit any
such content. Unauthorized usage is an infringement of our intellectual property rights and a violation of law and it may
also result in cancellation of subscription without any refund and may lead to legal action.
 Stock of the Month: GRASIM INDUSTRIES LTD

9th Sep 2021

- By research team
(research@marketsmojo.com)
8
This report has been created by www.marketsmojo.com exclusively for Mojo Professional Subscribers. You may not
WWW.MARKETSMOJO.COM
copy, reproduce, distribute, publish, display, perform, modify, create derivative works, transmit, or in any way exploit any
such content. Unauthorized usage is an infringement of our intellectual property rights and a violation of law and it may
also result in cancellation of subscription without any refund and may lead to legal action.
 Stock of the Month: GRASIM INDUSTRIES LTD
Disclaimers
Mojo Markets Private Limited (“the Company”), which owns marketsmojo.com (“the website”) is engaged
in the business of operating the website.

This research report (“Report”) is for the personal information of the authorized recipients and is not for
public distribution and should not be reproduced or redistributed to any other person or in any form
without the Company’s prior permission. The information provided in the Report is from publicly available
data, which we believe, are reliable. While reasonable endeavors have been made to present reliable data
in the Report so far as it relates to both current as well as historical information, the Company does not
guarantee the accuracy or completeness of the data in the Report. Accordingly, neither the Company nor
its shareholders, directors, officers, employees, advertisers, content providers and licensors are
responsible either jointly or severally for any loss or damage that may arise to any person from any
inadvertent error in the information contained, views and opinions expressed in the research reports.
Investment in securities is subject to market risks. Past performance should not be construed as a
guarantee for future returns and no representation or warranty, express or implied, is made regarding
future performance. Investments in equity and equity related securities involve a high degree of risks and
the users should be clearly aware that prices of securities as well as the income derived from these
securities can fall as well as rise.
The Report also includes the analysis and views of our research team. The Report is purely for information
purposes and should not be construed as an investment recommendation or advice or an offer or
solicitation of an offer to buy or sell any securities.
The opinions expressed in the Report are those as on the date of the Report and are liable to change from
time to time without notice. The Company or any persons connected with it do not accept any liability
arising from the use of this Report.
Investors should not solely rely on the information contained in this Report and must make investment
decisions based on their own investment objectives, judgment, risk profile and financial position. The
recipients of this Report should take professional advice before acting on this information.
This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or
resident of or located in any locality, state, country or other jurisdiction, where such distribution,
publication, availability or use would be contrary to local law, regulation or which would subject the
Company and its affiliates to any registration or licensing requirement within such jurisdiction. The
securities described herein may or may not be eligible for sale in all jurisdictions or to all category of
investors.
The Company is also a SEBI registered Investment Advisor (“IA”). The Company and its associates do not
own any securities of the subject company/ies mentioned in the report as on the date of this research
report.
The Research team engaged in the preparation of this Report and/or their relatives collectively did not own
more than 1% of the equity in the subject company/ies mentioned in this Report (unless otherwise
mentioned in such Report) nor did they have any other material conflict of interest on the date of this
Report.
None of the members of the research team engaged in preparation of this Report (unless otherwise
mentioned in such Report) have served as an officer, director or employee of the subject company in the
past twelve months.
No disciplinary action has been taken on the Company by any regulatory authority which can impact the
Equity Research Analysis.

We hereby expressly disclaim any implied warranties imputed by the laws of any jurisdiction other than
Mumbai. We consider ourselves and intend to be subject to the jurisdiction only of the courts of the
Mumbai in India and we shall be governed only by the laws as applicable in India. Even though the site has
global access, we are not governed by any laws of any jurisdiction other than India.

9th Sep 2021

- By research team
(research@marketsmojo.com)
9
This report has been created by www.marketsmojo.com exclusively for Mojo Professional Subscribers. You may not
WWW.MARKETSMOJO.COM
copy, reproduce, distribute, publish, display, perform, modify, create derivative works, transmit, or in any way exploit any
such content. Unauthorized usage is an infringement of our intellectual property rights and a violation of law and it may
also result in cancellation of subscription without any refund and may lead to legal action.