Aditya Birla Group company Grasim Industries shares declined 2% even though the company reported robust growth in profits for the quarter ended in March 2022.

The company reported a profit of Rs 4,070.46 crores for the quarter ended in March 2022 against Rs 2,616.64 crores posted during the same quarter last year, growing 55.6% YoY. The company's revenue from operations improved 18% to Rs 28,811.39 crores during the quarter. Its total expenses improved 23.5% to Rs 25,786.54 crores.

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The company's viscose filament yarn segment registered a record growth of 46% as demand for the same saw strong growth during the quarter, especially in the US and Europe. Revenue from its cement subsidiary, India's largest cement manufacturer, Ultratech Cement, grew 9.45% to Rs 15,767.28 crores. Its chemicals and financial services segment published impressive growth, growing 68.9% & 19% respectively.

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For the period of one year ended on 31st March 2022, the company's consolidated net profit came in at Rs 11,206.29 crores, up 60.4%. The company's sales for the year stood at Rs 95,701.13 crores, up 25.3%. Revenue from other segments reported strong growth of 28.8%.

The company announced that it was doubling its capital expenditure to foray into the paint business, to Rs 10,000 crores. Last year, the company's board approved a CAPEX plan of Rs 5,000 crores. The company is setting up five to six plants for its paints business. Construction of two plants- Panipat and Ludhiana- are already underway as production is expected to begin from the fourth quarter of 2023-24. Being the largest chemicals player in India, its announcement caused similar paints stocks to fall: Asian paints declined 8%, Indigo paints almost 3%, Berger paints over 7% & Shalimar paints almost 4%.

The Board of Grasim held a meeting wherein they decided on a dividend of Rs 5 per share, bringing the total dividend amount to Rs 10 per share. The share of Grasim has been consistently declining ever since mid-April as the company declined 1.92% today to close at Rs 1,375.55 per share, a price level that the share had last touched on (coincidentally) 25th May 2021, marking a loss of 17.2% to investors ever since the beginning of 2022.

Article by Aman Agarwal.

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