by Prashant Marathe | EduInvesting.in | 22 May 2025
🧠 At a Glance:
Let’s skip the fairy tale and jump straight into the facts:
Grasim Industries, the Aditya Birla powerhouse, posted solid numbers for FY25 but its balance sheet is screaming for attention.
| Metric | FY25 (Consolidated) |
|---|---|
| 📊 Revenue | ₹1,48,937 Cr |
| 💰 Net Profit | ₹7,756 Cr |
| 📉 EPS | ₹55.57 |
| 📍 CMP | ₹2,684 |
That’s good on the surface — but is the conglomerate structure hiding more than it’s showing?
🏢 About the Company
Grasim is a diversified behemoth operating in:
- 🧱 Cement (UltraTech)
- 💰 Financial Services (Aditya Birla Capital)
- 🧪 Chemicals & Viscose Fibres
- 📱 Telecom (Indirect exposure via Vodafone Idea 👻)
It’s like owning 5 companies in one — which sounds good… until the bill arrives.
📊 Q4 FY25 Snapshot
| Quarter | Revenue | Net Profit | EPS |
|---|---|---|---|
| Q1 | ₹6,987 Cr | ₹-52 Cr | — |
| Q2 | ₹8,917 Cr | ₹721 Cr | ₹10.84 |
| Q3 | ₹8,221 Cr | ₹-168 Cr | ₹-2.53 |
| Q4 | ₹9,153 Cr | ₹1,547 Cr | ₹22.22 |
| FY25 | ₹1,48,937 Cr | ₹7,756 Cr | ₹55.57 |
📌 Earlier EPS calculations were inflated — this is the correct scale post verification.
🧮 Forward-Looking Fair Value (FV Estimate)
EPS FY25 = ₹55.57
Assumed P/E = 22x (holding company + diversified mix)
🧮 FV = ₹55.57 × 22 = ₹1,222.54
📍 CMP = ₹2,684
⚠️ Overvalued by nearly 2.2x
Much of this is market pricing in UltraTech + NBFC growth + capex pipeline + “India growth” premium
🧾 EduInvesting Auditor Mode: Balance Sheet X-Ray
💣 1. Borrowings = ₹1.83L Cr
- Non-current: ₹1.23L Cr
- Current: ₹59,721 Cr
⚠️ That’s nearly 1.2x net worth
If interest rates move up, Grasim’s cash flow will feel it instantly
🧊 2. DSCR = 0.03 😬
This is a textbook red flag — below 1 means you’re not earning enough to cover debt obligations.
🧾 3. Cash Flow from Operations = ₹(17,169 Cr)
Yes. Negative.
Despite ₹7,756 Cr in profit.
Why?
- Working capital sucked up over ₹19,000 Cr
- Receivables up by ₹12,207 Cr
- Other current assets ballooned by ₹31,012 Cr
🧯 4. “Other Expenses” = ₹2.56L Cr
Wait what? That’s more than total revenue?
Not exactly — it includes:
| Expense | Amount |
|---|---|
| Power & Fuel | ₹62,273 Cr |
| Freight | ₹54,885 Cr |
| Insurance Liabilities | ₹33,736 Cr |
| NBFC Finance Costs | ₹25,858 Cr |
| Other Unclassified | ₹55,507 Cr |
➡️ Transparency exists… but this many moving parts = investor headache
📦 5. Inventory = ₹1.56L Cr
Way above the comfort zone.
It’s acceptable in cement and chemical verticals — but still, cash is tied up.
🔢 6. Segment Revenue Split (FY25)
| Segment | Revenue |
|---|---|
| Cement (UltraTech) | ₹81,300 Cr |
| Financial Services | ₹40,600 Cr |
| Viscose Fibres | ₹15,900 Cr |
| Chemicals | ₹8,650 Cr |
| Others | ₹3,280 Cr |
⚠️ Cement + NBFC = over 80% of business value
🧠 EduInvesting Take
Grasim is not a bad company.
But it’s priced like:
- It’s Apple
- With the cash of HDFC
- And the growth of Tesla
- While being a cement-NBFC hybrid with a side dish of Vodafone baggage
📉 Operating cash flow is stressed
🧾 Borrowings are high
📦 Working capital is stretched
⚠️ Risks & Red Flags
| Risk | Detail |
|---|---|
| 💣 ₹1.83L Cr Borrowings | Needs refinancing discipline |
| 🧊 DSCR = 0.03 | Deeply stressed cash position |
| 📉 Negative OCF | ₹(17,169 Cr) is no joke |
| 📦 Inventory Lock-In | ₹1.56L Cr parked |
| 🔍 “Other” Expense Blocks | Too many moving parts |
🧪 Final Verdict: A Great Business… But At This Price?
If you strip out UltraTech and NBFC arms, Grasim should trade around ₹1,200–1,400.
At ₹2,684?
You’re paying for 5 businesses, and only 2 are delivering.
Would we touch it now?
🚫 Not unless:
- Capex starts yielding
- Working capital shrinks
- Market corrects
Tags: Grasim FY25 Results, Grasim Industries balance sheet, EduInvesting audit mode, cement stock analysis, UltraTech valuation, Aditya Birla Capital, DSCR red flag, Indian conglomerates, undervalued or overhyped, high borrowings India
