Grasim Industries - Operational performance disappoints - Downgrade to HOLD - Emkay

Operational performance disappoints - Downgrade to HOLD

CMP: Rs2,483
Target Price: Rs2,550

- Q3FY12 standalone EBIDTA at Rs2.8 bn (-23% yoy) below est led by lower VSF volumes and margins. However APAT at Rs2.7bn (-3% yoy) came in line led by higher other income

- Though VSF realisation improved 4.4% yoy (3% qoq) led by INR deprecation, VSF volumes decline 7.6% impacted by sluggish demand across markets particularly in EU

- Due to 3Q operation performance miss we we cut FY12/13 EBITDA estimates by -3.9%/-5.1%. However the cut in EPS estimates is lower on account of higher other income

- Demand outlook for VSF remains uncertain - expect volatile VSF prices affected by factors like channel inventory, currency fluctuations. Cost to remain high led by CIL’s new coal pricing system. Downgrade to HOLD – lower TP Rs2550.

Source : Equity Bulls

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