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Motilal Oswal Report
Grasim Industries Ltd. should benefit from the changes in cotton industry dynamics. Viscose staple fibre demand growth should outpace cotton until FY25E. Further, the U.S. ban on cotton imports from Xinjaing region may trigger a shift to substitute products.
Focus on backward integration in the chemical segment should improve chlorine usage as Grasim Industries plans to increase chlorine consumption in value added products to 40% by FY25E from 28% in FY21. Chemical segment's operating profit margin should improve to 19% in FY23E from 13% in FY21.
Further, likely capacity expansions of 37%/33% in the viscose staple fibre/caustic soda segments, respectively, should improve volume/profits during FY22-24E.
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