Grasim Industries Limited (GRASIM) Q3 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Grasm Industry Limited Q3F526 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing stars and zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ankit Panchmatia, Head Investor Relations of Grasim Industries. Thank you. I'm over to you, Mr. Ankit.

Good morning, and thank you for joining Grasim's third quarter financial year 2023 earnings call. The financial statements, press release, and presentation are already uploaded on the websites of stock exchanges and our website for your reference. For safe favor, kindly refer to the cautionary statement highlighted in the last slide of our presentation. Our management team is present on this call to discuss our results and business performance. We have with us Mr. Yamanshu Kampanya, Managing Director, Grassham Industries, and Business Head Birla Opus Paints. Mr. Himan Kadel, Chief Financial Officer of Grassham Industries. Also joining them, we have with us Mr. Jayan Doble, Business Head of Chemicals, Cellulosic Fashion Yarn, and Insulators. Mr. Wadiraj Kulkarni, Business Head of Cellulosic Fibers Business, and Mr. Sandeep Komraveli, CEO of Birla Pavot, our B2B e-commerce business. Let me now hand over the call to Himachu, sir, for his opening remarks. Over to you, sir.

Good morning, and a very warm welcome to everyone joining us today. At the outset, we wish all of you a Happy New Year 2026. We hope that the year has begun on a positive note for you and your families, and it brings good health, continued progress, and renewed optimism. As we step into 2026, we do so with a sense of confidence and purpose. While the global environment continues to evolve the underlying strength of our markets, the resilience of demand, and our disciplined largest decorative paints players, 100 basis points, year-on-year based results of listed paints measures. On quarter-on-quarter basis, Birla Opus accelerated its market share gains with revenue growth of nearly three times the Indian decorative paint industry growth. The combined revenue of Birla Opus and Birla Opus 26, the revenue market share gap 300 basis points, based on the guided decorative sector 3 ABY 26, continued to gain traction during the quarter, supported by increasing project wins, the long gestation period, stages of negotiation, With nearly 25% billed to contractors and treated marketing, the office has surged in a short period, and lead management took quality approval, managed jointly by central and field team. This service has 5,000 pin codes, and we talked about it on pan-India basis through the 1,000 paint galleries at the Arugase. Separately, the company has given additional guarantee, besides the standard warranty clause, to redo the painting behind bill of office momentum is the second largest manufacturing capacity and capacity share. With the launch of Kharagpur and a steady ramp-up of capacity utilization across each of our six plants, the company has executed their natural production strategy by producing fast-moving category products closer to their market, cutting down the drag of logistics cost and inventory, and sharpening its service edge. ...on time and within budgeted capex operations and bring down significant variable costs. At the heart of our manufacturing journey lies a bold embrace of standardization to be validated in the framework and reinforces confidence of our customers, partners, stakeholders in our capabilities. A deep commitment to the highest standards of quality excellence and marks a powerful step. Before I move on to the next business, I wish to address understanding is without putting our biggest differentiator experience.

25, November 2025, nearly BTM basis, solidated EBITDA 06 million metric ton, million metric ton. Capacity expansion is clear from critical from three or four perspectives on the development journey. Secondly, it enables us to grow ahead of industry curve, demand and supply cap across critical markets nationwide. And lastly, it further strengthens. While capacity expansion remains core to our growth, we have embedded a culture of efficiency to ensure that our growth is resilient, sustainable, and underpinning the strength is our EBITDA growth, 9% year-on-year with an EBITDA return of Rs. 1051. Our MD has already covered paints and B2B e-commerce business. Hence, let me now directly come to our core businesses of cellulose, fiber, and chemicals. Highlight for these core businesses is that while we can keep on discussing them individually, irrespective of community cycles, both the businesses combined have delivered consistent sustainability, capital allocation, and cost effectiveness are key tenets to such consistency, Starting with cellulose fiber, the business has delivered EBITDA of Rs. 491 crore, growth of 48% year-on-year. This is driven by three factors. 1. Improved realization due to favorable content mix led by exports. 2. The demand for cellulose fiber in China continues to exhibit similar steps for cellulose fiber, decoupling with other competing fibers, which are on a declining trend over the past few quarters. 3. Cellulose fiber, which are largely stable. 4. Cellulose fiber segment performance for the quarter was subdued due to cheaper imports from China, which has created oversupply. And secondly, chemical business, the revenue growth of 5% year-on-year was largely driven by volume. Caustic soda sales volume for the quarter three F526 stood at highest ever 313,000 tons, 4% year-on-year. SEA prices are down on YOY basis. Domestic caustic prices are showing some resilience led by stable demand and rupee depreciation. EBITDA in chemical business was lower by 4% year on year due to lower BQ realization and lower profitability in specialty chemical business. Higher ECH price resulted in lower profitability in specialty chemical business, which was partially offset by lower BPA prices. Coming back to the consolidated business, in the financial services, it is one of the fastest growing businesses in our portfolio. This is driven by their multi-channel approach aimed at providing customers with seamless experience across channels of interaction. The revenue was up by 29% year-on-year, led by all-round performance across lending, asset management, insurance, and advisory services business. Total lending portfolio, which includes NBFC and housing finance, grew by 30% year-on-year to over Rs. 1,90,000 crore. On a strategic front, we would like to highlight the recent announced partnership with Advent International, which also marked an important milestone for Ajitri Pidla Capital. During the quarter, Ajitipedla Capital Board approved a primary capital inclusion of 2,750 crore into Ajitipedla housing, valuing the business at approximately 19,250 crore on a post-money basis. Advent will hold roughly 14.3% of housing finance, with Ajitipedla Capital retaining about 85.7, subject to customary shareholder and regulatory approvals. In other businesses, starting with renewable business, Aditya Builder Renewable grew by 82% year-on-year, largely led by higher capacities, which now stands at nearly 2% peak capacity, compared to 1.2 gigawatt, quarter 3 up by 25. Aditya Builder Renewable has announced a strategic investment by Global Infrastructure Partners, which is a part of BlackRock. This deal marks one of the largest primary private equity commitment into an Indian renewable company. EIB will invest up to Rs. 3,000 crore, comprising of an initial 2,000 crore commitment with a green shoe option of 1,000 crore, subject to customary regulatory and closing conditions. Posted this deal, the renewable business is valued at an EB of 14,600 crore. I am happy to say that this partnership is expected to accelerate Aditya Bila Renewal's growth trajectory as it builds on its operational and contracted capacity of nearly 4.3 gigawatt of peak capacity portfolio across solar, hybrid, floating solar, and RTC assets and targeting scaling capacity beyond 10 gigawatt of peak capacity in coming years. This transaction brings not only capital, but also the GIP's global infrastructure operating experience to support disciplined expansion and contribute meaningfully to India's energy transition goal. As regards CAPEX, post-commissioning of Kharagpur plant, we have completed majority of the plant capital expenditure in decorative plant business. The capital expenditure spent on YTD basis is 1,310 crore. Focus now remains on Phase 1 of Harrier Li-O-Seal project for additional 55,000 metric tons or enough capacity of speciality fibers. As on 21st December 2025, net debt of the company is to lower at 6,882 crore compared to 8,277 crore in the same period last year, with net debt to PTM EBITDA and the year 2.1 level. Let me now open the floor for Q&A.

Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on your touchstone telephone. If you wish to remove yourself from the question queue, you may press star and toe. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Naveen Zahbev with ICSA Securities. Please go ahead.

Yeah, good morning, sir. I hope I'm audible.

Yes, yes.

Yeah, so thank you for the opportunity, and also thank you for the detailed initial comments. Two questions. First, of course, on the paints business. So, needless to say, the company has done a commendable job. I believe for the quarter, the revenues given like, you know, 8,500 crore run rate for the Villa Privet and numbers that are published for Ultratech, our sense is Paints would have done roughly 1,200 crore kind of revenue in this particular quarter, which, of course, is great from the start that we have had. My question is the growth is seen maturing. In the sense, in Q1, a similar sort of a very rough cut working suggested 1100 kind of a growth in the June quarter, similar flattish in September, and now we are at 1200 give or take some margin there, I mean, some buffer there. Now, to reach the scale of 10,000 crore exit by Q428, which is around 2,500 crore revenue, over the next nine quarters, we need to grow at 40% CAGR year on year for us. So, I'm just trying to understand, first of all, what different then now the company will do or what convinces us now, given that the growth is maturing in the last one, two quarters, how should one look at this target realistically being achieved and in that, what is also the industry value growth into consideration? That's my first question.

Okay. Thank you, Naveen. So, while you have done your internal calculations, I am not going to either accept or deny it. But all I can say, both on quarter-on-quarter basis, we have had a robust, more than double-double-double-double-double-double-double-double-double-double-double-double-double-double-double-double-double-double-double-double-double-double On an annualized basis, these numbers are tending towards a three-digit growth. So I don't know what numbers you have in your calculations and using words called mature, when we have grown on a year-on-year basis by 300 basis points in the paint industry. And we see a similar kind of consumer uptake in the current quarter. On an overall basis, we are seeing across geographies a very strong demand for Villa Opus Paints, and a large number of existing dealers who have joined us have increased their throughput. And they continue to grow at levels of strong single digit on a quarter-on-quarter basis, and we continue to add 5 lakh contracts on their basis.

The price increase that we have taken, as you said, across 2 to 6 percent, despite that, you are saying we are confident to achieve the revenue target.

Particular distance from the market leader, and we felt the distance was slightly more than what was necessary, and we're bringing that gap. That is the objective of price increase, and there is no other objective. We want to test at what demand of consumer and contractor remains at the device price.

Yeah, go ahead, please.

No, that's fine.

Okay, okay. Thank you. My second question then was on your Birla pivot business, and of course, fast execution, much, much ahead of expectation. But we had also, I think, hinted the first time we gave this target, the road to profitability or break-even for this business was also like a billion-dollar kind of revenue run rate. So, is it now fair that since we have achieved almost, we are there, this business is baking even or will start making positive contribution? How should one look at profitability for Birla Pivot from now going ahead? Thank you. These were my questions.

Thanks, Amin. This is Sandeep here. On the profitability front, we are making progress similar to how we have executed on the revenue side, and the growth has been excellent over the last few quarters. We've been making good progress on bridging the gap so that we can get to break-even as well. I think from our current estimates, we will exit F527 at a break-even level. That is our current estimate.

Thank you. Thank you.

Next question comes from the line of Rahul Gupta with Morgan Stanley. Please go ahead.

Hi, thank you for taking my questions. Two questions. One, continuing on the pivot point, I remember earlier you had made a point to, earlier you had guided to cash break even by 2030. So you are now front loading it, accelerating it to fiscal 27 end, right?

Rahul, I don't think we gave the guidance of 2030 earlier, but, you know, as I mentioned in response to the earlier question, you know, FI27 exit, we should be exiting the year at breakeven, yes.

Okay, that's great. My second question is, on the continuation of the point you made on the paints, you are testing waters with 2% to 6% hikes in January. You know, it's early days. Can you please help us understand how the acceptance has been? And if we look at the industry, which has been struggling with discounting, how should we look at the overall industry from here on? Or let's put it this way, how volume versus value gap should move over the next year for industry? And you, thank you.

First and foremost, as I mentioned in the previous answer, the gap between the leader and us was high, and we've used this price increase primarily to bridge the gap. We obviously still are a single-digit player, and our aim is to bridge the gap between our capacity, which is at 24%, to our current revenue market share. So that is part one. It's early time to be able to say what is the response to the price increase because we've had certain range of products where we took price increase on 28th of January, and the remaining range of products is happening on 25th of February. So, it would be better I respond to the consumer and contractor response after the quarter four results are there, because we are still in the process of executing the price increase. But on a mid-to-long-term basis, what is our view about the industry? There has been, as challenges have been, over-focus on to premiumize the service and luxury. Making every effort to premiumize and ensure that the building building office may grow by 5 to 65, it was nil.

Thank you so much. Wish you all the best.

Thank you. Next question comes on the line of Nirav Chimudia with Anvil Bell. Please go ahead.

Thanks for the opportunity. It's a medium term. And on a longer term basis, with now UFTA also in place, how do we see our volumes in terms of exports to that region as well?

Thanks, Neera. Hi, thanks for your question. Can you hear me?

Yeah, yeah, sir.

Both are positive for us. So, as you know that in epoxy, particularly in liquid epoxy resins, the Koreans have been available in India due to their FDA. You know, they get a certain advantage that they can bring in product without the duty. And also, you know, they had preferential access to US as well as Europe. Now, clearly that advantage is going to go away. If you look in terms of timing, then the U.S. deal probably will get actioned before the American deal. So I am seeing a positive upside on export of epoxy from India to the U.S. Now, how much quantity that will be, how that will ramp up, etc., is a matter of individual customer qualifications and those kind of things. That's a little bit too much detail to get into right now. But we do see a positive impact on that side. Similarly, if you look at Europe, as you know very well in Europe, the European chemical industry is struggling with high costs, both from the perspective of energy, but also from the perspective of extremely high labor costs. As you know, a lot of restructuring has been announced in Europe. You know equally that Westlake has stopped operations on their Rotterdam site. I think the India-Europe effect on the Indian chemical industry, probably, in my personal opinion, more than the U.S. Of course, the speed to ratify all this will get down into law, etc. will be a little bit slower, but I believe that will be more sticky. So, both these arguments, sir, Nirov, are, I think, positive for the industry.

Got it, sir. So, just two clarifications here, sir. A, do we import any raw material from EU which were earlier subject to taxes and now with this deal could help us from the chemical business point of view also and from an overall business point of view also? And B, any volume guidance which you would like to share from the epoxy business point of view for FY27? Thank you so much.

Yes, so if I look at imports from Europe, yes, we have some. I would not like to get into the details of what that is, but those are like, you know, they are not a large part of our basket, so I don't see really a large benefit from that. What I may think of is, you know, if glycerin prices continue to remain high, then the propylene route to ECH has its own competitive advantage, right? And several of the propylene-based producers are Western-based. But there's a logistic cost hurdle. So let's see how this plays out in the long term. If you look at volume growth, then if I look year-on-year, our overall, you know, epoxy business, liquid epoxy plus formulations, this year has grown, or at least, you know, for the year-over-year, we have grown by about 6%. How much it will ramp up by is a matter of speculation, but I expect that rate to ramp up.

It's safe to assume that this ECH price corrections, which have happened on the upside, would translate into a similar increase in the prices of epoxy, which generally gets passed on a lag basis. Yeah, there is usually a timeline associated with that.

As I mentioned, in the epoxy value chain, there are competing routes, right? Glyphorin-based ECH and propylene-based ECH. So, what may be a pass-through for me may not necessarily be a pass-through for somebody else, maybe globally who may be propylene integrated. So, depending on where crude prices, propylene prices, glycerin prices, the pass-through mechanism has a different cyclicality, but in the longer term, it all always passes on, right? It's always a matter of time, but the exact speed by which it passes on depends upon these three, four factors.

Sir, last clarification, if you allow. This quarter, we have seen deep in our epoxid revenues. So, was it more because of the volumes were lesser this quarter and that should start correcting next quarter onwards? Is this the right assumption to make? So, just let me quickly check the data.

Yes, so volumes were slightly under pressure on the liquid epoxy resin side. Actually, maybe the better way to see it is, you know, we decided not to take certain volumes where we thought the margin was getting too squeezed. That's probably the better way to see it. If I look at the non-LER business, you know, all the formulation specialties, so the specialties within the specialties, there actually we have not had any volume issue. It's on the margin where perhaps the lowest profitable part of our LER business, we have been a little bit, you know, unwilling to allow our margins to get compressed too much.

Thank you. Mr. Jemudia, please rejoin the queue for more questions. Next question comes from the line of Amit Purohit with Kilara. Please go ahead.

Yeah, hi, thanks for the opportunity and thanks for the detailed data points on the field. Just to re-check on the overall change that we sold, you talked about 500 billion kilolitres. That was since the time we have been into the market. It's a cumulative or did I answer this correctly? Okay, that is since the time we have started the operation with that. Okay, and secondly, sir, also wanted to understand, when you talked about 300 bits lower than the second player, that includes putty and everything, right, at this point of time.

I am again saying what we said in the statement, opening remark, Villa White plus Villa Opus revenue for quarterly and guidance given by number two players. In our assessment, internal estimate, now the gap is 300 basis point. I hope it's good. And it is only Villa White's footy business. It does not include any other business.

Sure. Sure. And, sir, you talked about increase in new dealer edition. I just wanted to understand the typical profile of these dealers. If you could just qualitatively highlight these are large dealers or these are dealers largely from the market leaders or if you could just some highlight. Because typically, I mean, there is different types of dealers. And initially, when we started off, obviously, there were challenges to reach out to the very, very large dealers. What is the state now, I mean, in terms of acceptance?

We are getting blend from all category of dealers. In our internal assessment, we broke on the dealers into A category, which are more than 3 crores, B category, which is 1 to 3 crores, C category, which is 30 lakhs to 1 crore, And D category into less than 30 bucks. Most of the dealers are coming in in the A, B, C. The small number will also come in the D category, but are focused in the A, B, C category.

And lastly, the price increase that we highlighted, that is more from a testing perspective or is there any raw material pressure which kind of or do you think that from now on the brand is strong enough to kind of take pricing and still it adds value to the entire channel as well? I just wanted to know your outlook as you highlighted that next year, FY27, the growth in the industry could be closer to about 8%. So, the pricing volume graph should reduce in the FY27. That's the last question.

First and foremost, there are no current raw material pressures. Second, we have been consistently maintaining that we are at a lower price than the market leader and we felt the gap was higher and we reduced the gap. That has been the strategy around there. It is not a price increase strategy per se as you are reading it. Please read it that we would like to maintain a certain gap with market leader, and we want to test at that gap what is the consumer response. There was an X gap that existed, and we reduced that gap.

Sure. Thanks a lot. Thank you.

Thank you. Next question comes from the line of Patanjali Srinivasan Patanja with Sundaran Mutual Funds. Please go ahead. Hello. Mr. Patanja, please go ahead.

Yes. Thank you for the opportunity. A couple of questions. So, firstly, could you explain a bit on our share of retail business and institutional business? Because I believe we've grown pretty fast in our institutional business, but I was just trying to figure out if the base there is lower or are we tilted more towards institutional business?

Okay. So, to our understanding, the industry, retail and institutional business mix is 85-15. We are not yet there on that mix. We are still a single digit on the institutional business. Retail is much faster to take off and institution has a much longer gestation period. The message that I was communicating is that we have a strong pipeline and hopefully by FY27, we should be able to come closer to the industry average between 12 to 15 percent on overall contribution from institution.

So, could you give me some numbers, sir, where we are in terms of range here?

As I explained, we are a single digit number, and we are, we have a strong pipeline of institutions, but retail continues to be the stronger forte for us at this point of time.

Sure. And just one more question. So, this number of saying that 18% is grown Last quarter and all of that. There's just one part where I've not been able to figure out. Like, I met a couple of dealers from the time we started and more recently. And I have seen some of them saying that they've either stopped doing business or they're finding it difficult or something like that. While my sample size is very small, I want to know, like, what is an acceptable level of pushback or reduction in dealers when we expand dealership and what are our targets here and where are we here?

It's a large dealer universe. There are over 100,000 dealers. On an average, in a quarter, about 50 to 60% of the dealers are active. And we are also experiencing a similar level. In fact, our senses are active around there.

Just to continue on that, I just wanted to know what is our policy with tinting machines that we have given to dealers and where dealers have not been doing as much business as we like to them. How are we dealing with them and have we started collecting money for tinting machines that we have given to dealers?

No, we don't collect money. As we already explained, we give the dealers free-of-charge printing machines, and that remains a consistent policy as default on its payment for a long period of time. Are there any actions that are necessary and are not relevant?

Thank you. Mr. Patanjo, please rejoin the queue for more questions. Next question comes from the line of Pratik Kumar with Jeff Rees. Please go ahead.

My question is on paints. Can you just confirm again while you talked about your revenue expectation maintaining for FF28? What do you think on prop stability? Other related question, you have like seen some increase in draft expense in the portfolio frequency and depreciation. Is this completely related to capitalization of six plants or also if there are any working capital changes which you expect because you are also increasing in your business? Thank you.

I just want to be clear what your question is. You are referring to overall GRASIM results and you are saying that the interest and depreciation component are gone up. Is that what you are referring to?

Yeah, that is right.

Yeah, so in Grasim, if you are referring with the last year, the borrowing for the…

Q1, Q1, I mentioned.

Setting up the new plants was being capitalized. In the 15th of October, we have commissioned our last sixth plant, and now from quarter, next quarter onwards, there will be no capitalization, and all the interest costs will be coming to P&L account. Is this the answer, Sivakuri?

Yeah, sure. So, there is no material working capital changes because we are shifting business, paying segment business to more institutions that doesn't have no interest.

Sorry for interrupting. Mr. Kwan, your voice is breaking. Can you just come a little closer to the mic and speak?

In Payne's business, we have capitalized over all the six plants and no major capital spending enough.

If your question is on debtors, we are well in control as a debtor, then working capital is not a challenge. We repeat again that the interest component in the past, a portion of that was getting capitalized, and now it will not, the portion is significantly because from six plants now down to, in our 15th October, it's only one plant, and that also, a part Thank you.

And the other question was on paint segment profitability, which you are expecting for SR28. You maintain it as, like, turning positive by SR28?

Yes. We maintain our guidance. I'll repeat, within three years of full-scale operation, we are targeting to be able to reach a profitable number two position.

Thank you, Vanoghle.

Thank you.

Next question comes on the line of Shriya Bhantia with Oakland Capital Management LLP. Please go ahead.

Yeah, thanks for the pause. My question is...

Am I audible?

Yes, you are. Please go ahead.

Yeah, so my question is regarding the chemical segment. So if you could share, what is the current share of renewable energy in the chemical segment?

Just a second. It is around, exit rate is around 22-23%, right?

Thank you.

And we expect, we actually are targeting to reach an exit rate of over 40% by end of FY27, if you want to make a projection.

Thank you very much. That was my question.

Thank you. Next question comes on the line of Ripal Kumar Anupjansh Shah with Sumangal Investments. Please go ahead.

Hi, thanks for the opportunity, sir. So, when will we start sharing the revenue and EBITDA numbers of our paint business? Shortly. Shortly means, sir?

Yes. Even today, because that's why there is a portion of the material that has been produced and was not sold, and they are still reflecting revenues which are getting capitalized. We expect him to complete that, and we will move on to this. We will share with you the exact dates when we do that. But there is still, and so that's why this gap between capitalization, that's why the numbers, what market calculates, there is a gap, and we want to finish all the materials that we have produced before commissioning and consume it, which remains in the capitalization.

So, should we assume that from next financial year, you will start sharing those numbers, sir?

We will carefully come back.

Okay. Thank you. Thank you.

Ladies and gentlemen, due to time constraint, that was the last question for today. We have reached the end of question and answer session. I would now like to hand the conference over to the management for closing comments.

Thank you so much for participating on the crashing call. We are now going to close the call.

Thank you.

Thank you.

Thank you. On behalf of Krasim Industries Limited, that concludes this conference. Thank you for joining us. You may now disconnect from me.