Grasim Industries | A promising investment

fundamental analysis Jan 16, 2021

Stock analysis: Grasim Industries

This article is about Grasim Industries.
Grasim is a leading global producer of Viscose Staple Fibre, the largest Chlor-Alkali, Linen and Insulators player in India. Through its subsidiaries, UltraTech Cement and Aditya Birla Capital, it is also India's largest cement producer and a leading diversified financial services player. Scroll till the end to see our final verdict.

Market capitalization and stock price history

Grasim Industries has a market capitalization of 679.696 billion, at the time of making this video.
Its stock price made an all time high of rupees 1293 on 02 November 2017.
market cap and stock price
In past five years, the stock price made a low of rupees 400 on 24 March 2020.
stock price variation

Stock returns

This stock gave compounded annual growth of 34 percentage over past one year, -5 percentage over past three years, and 13 percentage over past five years.
stock returns

Revenue and profits

In past 12 months, Grasim Industries had a revenue of rupees 703.0 billion, and a gross profit of rupees 411.2 billion.
As compared to previous fiscal year, in the past 12 months, it has seen a revenue decline of 8.4%.
On 31/3/2020, Grasim Industries reported a total revenue of rupees 767.5 billion, and has seen a revenue growth of 6.3% from the previous year.
The company reported an EBITDA of rupees 129.6 billion.
revenue

Fundamental analysis

Now let us look at some key financial ratios to guage how good or bad this stock is.
Its "beta" value, which is a measure of volatility of stock, is 0.92.
This means the stock moves with less volatility than the market. High-beta stocks are supposed to be riskier but provide higher return potential; low-beta stocks pose less risk but also lower returns.
Based on the last twelve months, the price to earnings ratio is 20.28.
The price to earnings ratio indicates whether the stock is undervalued or overvalued.
Based on the last twelve months, the earnings per share value is 50.95.
fundamental analysis
Now, we will compare some key financial ratios with the top 1000 NSE stocks.
For this purpose, we divide the distribution of these key indicators in to four parts or "quartiles".
Quartile region is obtained by dividing all the stocks in 4 buckets, so that each bucket contain same number of stocks.
As compared to top 1000 stocks in NSE, Grasim Industries has its beta value in the second quartile.
This means the stock exhibits low volatility.
beta
Grasim Industries has earnings per share of 50.95, which is higher than 86% of top 1000 NSE stocks.
The earnings per share value is very good.
Earnings per share is a company's net profit divided by the number of outstanding shares. This is a wildly used metric to estimate corporate value.
EPS
market cap and stock price
Grasim Industries has price to earnings ratio of 20.28, which is higher than 32% of top 1000 NSE stocks.
The price to earnings ratio is in the second quartile, this means the company stock may be undervalued.
A high price to earnings ratio may also mean that investors are expecting high growth rates in the future.
Price to earnings ratio measures its current share price relative to its per-share earnings.
price to earnings
comparison1
Grasim Industries has price to book value ratio of 1.13, which is higher than 26% of top 1000 NSE stocks.
The price to book value ratio is in the second quartile, this means the stock may be undervalued.
The price-to-book ratio compares a company's market value to its book value. Book value is net assets of the company.
This ratio should be looked at in conjunction with return on equity ratio. A low return on equity combined with high price to book ratio means stock is overvalued.
price to book ratio
comparison 2
The return on equity value for this stock is not available.
The return on equity is calculated by taking company's net earnings after taxes, subtracting preferred dividends, and dividing by the total equity.
return on equity
comparison 3
Grasim Industries has debt to equity ratio of 71.58, which is higher than 62% of top 1000 NSE stocks.
The debt to equity ratio for this stock is in the third quartile, which is not good.
A debt to equity ratio is company's total liabilities divided by shareholder's equity, and lower value of this ratio is preferred.
This ratio is a measure of the degree to which a company is financing its operations through debt versus wholly-owned funds.
A higher value of this ratio tend to indicate higher risk to the investors.
debt to equity
comparison 4
Grasim Industries has operating cash flow of 161.8 billion in the past 12 months, which is higher than 91% of top 1000 NSE stocks.
The operating cash flow for this stock is in the fourth quartile, which is very good.
operating cash flow
comparison 5
Grasim Industries has levered free cash flow of 120.2 billion in the past 12 months, which is higher than 82% of top 1000 NSE stocks.
The levered free cash flow for this stock is in the fourth quartile, which is very good.
levered free cash flow
comparison 6
Grasim Industries has payout ratio of 8.33%, which is higher than 44% of top 1000 NSE stocks.
The payout ratio of this stock is in the second quartile, which is not good.
The dividend payout ratio provides an indication of how much money a company is returning to shareholders versus how much it is keeping on hand to reinvest in growth, pay off debt, or add to cash reserves.
payout ratio
comparison 3

Income Statement

EBITDA
The company reported an EBITDA of rupees 129.6 billion in year 2020, which is 9% less than the EBITDA from the previous year.
The company showcased earnings per share of 67.4 in year 2020, which is 150% more than the EPS from the previous year.
EPS growth

Balance sheet

Grasim Industries has shown year on year increase in stockholder's equity by 1.6% in year 2020.
This stock showed year on year decrease in stockholder's equity by -2.8% in year 2019.
This stock showed year on year increase in stockholder's equity by 82.8% in year 2018.
stockholder equity

Cash flow

Grasim Industries has free cash flow of rupees 120.2 billion in the past twelve months.
The free cash flow for the year 2020 was rupees 115.4 billion.
Cash flow

Comparison with NIFTY50

Here you can see statistics related to number of shares.
40.70% of shares are help by insiders
26.82% of shares are help by institutions
fundamental analysis
Grasim Industries is at position 45 in terms of market capitalization among the nifty 50 stocks.
market cap and stock price
Grasim Industries is at position 18 in terms of annual revenue among the nifty 50 stocks.
market cap and stock price
Grasim Industries is at position 2 in terms of free cash flow among the nifty 50 stocks.
market cap and stock price
Here, we presented a very simplified assessment of fundamental indicators. We categorized the performance on each indicator by comparing it with top 1000 NSE stocks.
On your side, go thoroughly through the financial data before deciding on investing in this stock.
market cap and stock price

Final Score

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