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INVESTMENT INSIGHTS

Check Before You Invest : Grasim Industries Ltd

BSE: 500300 NSE: GRASIM ISIN: INE047A01021
  |   Sector:  Diversified   |   Industry:  Diversified

Snapshot

Q.1 Which industry/sub-sector does Grasim Industries Ltd belong to?
Grasim Industries Ltd belongs to the Diversified sector, operating specifically within the Diversified segment.
Q.2 Is Grasim Industries Ltd a good quality company?
Grasim Industries Ltd is a average quality company, based on a somewhat consistent multi-year financial track record.

This assessment is based on company’s performance on Revenue growth, ROCE, Equity and Assets, key margin ratios, cash conversion cycle, and debt to cash flow from operations and how it compares with its long term averages.

Q.3 Is Grasim Industries Ltd undervalued or overvalued?
Grasim Industries Ltd appears Undervalued, as its key valuation ratios are lower than their past averages.

Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more.

Valuation Ratios Current 5-year
Historic Median
Price to Earnings 44.83 20.58
Price to Book 1.98 1.79
Price to Sales 1.2 1.19
EV to EBITDA 11.17 10.59
Q.4 Is Grasim Industries Ltd a good buy now?
Grasim Industries Ltd is a good buy now, based on strong price trend analysis suggesting prices may rise. However, you need to check its quality and valuation before making a decision

Performance Analysis

We have analysed the performance of the company on the following:

  • How has it performed on generating Profits?

    By checking its Revenue growth, Gross, Operating and Net Margins compared to its last 5-year median.

  • How efficiently has it utilized Capital?

    By checking its ROCE, ROA, ROE and its Cash Conversion Cycle.

  • How is it managing its Debt?

    By checking its Debt to Equity and Cash Flow from Operations.

A: What are the trends in revenue and profit margins?

Q.1 Revenue growth of Grasim Industries Ltd?
Grasim Industries Ltd revenue growth is 13.4% for FY-2025, which is below its 5-year CAGR of 14.59%, indicating slower growth.

Q.2 Gross Profit margin of Grasim Industries Ltd?
Grasim Industries Ltd Gross profit margin which is the profit after deduction of direct costs, is 10.5% for FY-2025, which is below its 5-year median of 15.1%, indicating decreasing margins.

Q.3 Operating Profit Margin of Grasim Industries Ltd?
Grasim Industries Ltd Operating Profit Margin which is the profit after deduction of all operating costs, is 19.05% for FY-2025, which is below its 5-year median of 20.77% indicating decreasing margins.

Q.4 Net Profit Margin of Grasim Industries Ltd?
Grasim Industries Ltd Net Profit Margin is 5.22% for FY-2025, is below its 5-year median of 8.83%, indicating decreasing margins.
Current Level 5-year
Historic Median
Gross Profit Margin (%) 10.5 15.1
Operating Profit Margin (%) 19.05 20.77
Net Profit Margin (%) 5.22 8.83

B: Does the business utilize capital efficiently?

Q.5 Return on Asset of Grasim Industries Ltd?
Grasim Industries Ltd Return on Asset is 1.7%, which is below its 5-year historical median of 2.65%, indicating deteriorated asset utilization efficiency.

Q.6 Return on capital employed (ROCE) of Grasim Industries Ltd?
Grasim Industries Ltd Return on capital employed is 9.24% for FY-2025, which is below its 5-year historical median of 11.38%. The current ROCE is below its estimated weighted average cost of capital (WACC) of 11.25%, indicating value preservation.

Q.7 Return on Equity (ROE) of Grasim Industries Ltd?
Grasim Industries Ltd Return on equity is 8.39% for FY-2025, which is below its 5-year historical median of 11.93%, indicating the business is making worse use of its shareholders capital.

Q.8 Cash conversion cycle of Grasim Industries Ltd?
Grasim Industries Ltd Cash conversion cycle is 2 days, above its 5-year historical median of -3 days, indicating deteriorated working capital management. However, you need to compare this with its peers in the industry.
Current Level 5-year
Historic Median
Asset Turnover (x) 0.36 0.37
ROE (%) 8.39 11.93
ROCE (%) 9.24 11.38
Cash Conversion Cycle 2 days -3 days

C: How much debt does the business have and is it at a sustainable level?

Q.9 Debt to Equity ratio of Grasim Industries Ltd?
Grasim Industries Ltd Debt-to-Equity ratio is 1.90, which is above the industry average of 0.21, indicating higher debt levels in the industry.

Q.10 Debt to cash flow from operations of Grasim Industries Ltd?
Grasim Industries Ltd Debt to cash flow from operations is -10.7, which is at a unhealthy level.

Ownership & governance

D: Promoter shareholding and pledge status of Grasim Industries Ltd?

Q.1 Promoter shareholding and pledge status of Grasim Industries Ltd?
Promoters hold 43.74% of the Grasim Industries Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

E: How does Grasim Industries Ltd performance compare with that of its Peers?

Q.1 Revenue growth of Grasim Industries Ltd vs industry peers?
Grasim Industries Ltd revenue CAGR is 14.59%, compared to the industry median CAGR of 14.59%, indicating stable growth and maintaining its market share.
Profit Metrics
Current Level 5-year
Industry Median
Revenue Growth (%) 13.4 14.6
Gross Profit Growth (%) -10.2 8.7
Operating Profit Growth (%) 3.9 10.4
Net Profit Growth (%) -21.9 3.4
Operating Efficiency
Current Level 5-year
Industry Median
Asset Turnover (x) 0.36 0.37
ROE (%) 8.39 11.93
ROCE (%) 9.24 11.38
Cash Conversion Cycle (days) 2.23 -3

Valuation & price assessment

Q.1 Stock return of Grasim Industries Ltd over the last decade?
Over the last 9 year(s), the stock has delivered a CAGR of 13.7% based on the current price.
9Y 5Y 3Y 1Y
Share Price
CAGR		 13.7% 15.5% 19.1% 12.7%
Q.2 Valuation ratios of Grasim Industries Ltd vs historical?
The current P/E ratio of 44.83 is higher than its historical median of 20.58, indicating that the stock is trading above its historical average valuation.
Q.3 How do the current valuation ratios compare with 5-year historical median and industry numbers?
Valuation Ratios Current 5-year
Historic Median		 5-year
Industry Median
Price to Earnings 44.83 20.58 16.32
Price to Book 1.98 1.79 1.78
Price to Sales 1.2 1.19 1.43
EV to EBITDA 11.17 10.59 9.60

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