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Grasim Industries Limited_docx Chetan Arora

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Summary
Comparable Analysis
Grasim Industries Limited & Dalmia Bharat Limited

FINANCIAL COMPARABLE
ANALYSIS

Grasim Industries Limited & Dalmia Bharat Limited

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Comparable Analysis
Grasim Industries Limited & Dalmia Bharat Limited

Contents
Executive Summary ............................................................................................................................................. 3
A. Grasim Industries Limited Overview FY 2023 – FY 2024 ........................................................................... 6
B. Dalmia Bharat Limited Overview FY 2023 – FY 2024 ................................................................................. 9
C. Grasim’s & Dalmia’s Comparative Analysis (FY 2024) ............................................................................. 13

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Comparable Analysis
Grasim Industries Limited & Dalmia Bharat Limited

Executive Summary

Grasim Grasim Industries Limited, belongs to Aditya Birla Group, it is one of the India’s top
Industries ranking company. It was incorporated in 1947, it is a leading diversified player with
Limited leadership presence across many sectors. It is a leading global producer of
Diversified Chemicals, Cellulosic Fibers, Fashion Yarn and Fabrics producer in India.
The company has entered paints business under the brand name ‘Birla Opus’. Out
of the six plants to be set-up for manufacturing decorative paints across pan India
locations, three plants commenced operations in Apr’24. Leveraging the Group
synergies, Grasim has launched ‘Birla Pivot’, the B2B online marketplace for building
materials. Through its subsidiaries, UltraTech Cement, Aditya Birla Capital and
Aditya Birla Renewables, it is also India’s prominent cement producer, leading
diversified financial services player and clean energy solutions player. The company
reported consolidated net revenue of ₹1,30,978 Cr. and EBITDA of ₹20,837 Cr. in
FY 2024.

Dalmia Bharat The Dalmia Bharat Group was founded in 1939. The group now enjoys leadership in
Limited core sectors such as Cement, and Sugar. It is amongst the most efficient cement
companies in the world and the Cement business, through sustainability initiatives,
has achieved the lowest carbon footprint in the cement sector globally. Being one of
the leading sugar producers in the country, the sugar business is geographically well
diversified and committed to ‘Green Growth’ which empowers the group to enhance
value for all its customers. Traditionally the Group had an interest in Refractories.
In the last ten years, the group’s sales have grown at a CAGR of 16% in FY24, and
the Market CAP has also grown to ₹ 39,250 Cr by end of FY24. As of today, the
group collectively employs over 8000 people.

Conclusion If the investor wants to make an investment in the company which has stronger
profitability and potential for higher returns with higher risk, Grasim Industries will be
the better choice. However, if the priority is liquidity, asset efficiency, and a company
with less emphasis on debt, Dalmia Bharat will be more attractive.

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Comparable Analysis
Grasim Industries Limited & Dalmia Bharat Limited

Grasim’s Management

Dalmia’s Management

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Comparable Analysis
Grasim Industries Limited & Dalmia Bharat Limited

FINANCIAL
OVERVIEW

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Comparable Analysis
Grasim Industries Limited & Dalmia Bharat Limited

A. Grasim Industries Limited Overview FY 2023 – FY 2024

Ratio Analysis

Debt to Equity Y-o-Y Analysis Net Profit Margin Y-o-Y Analysis

10.00%
150
Rs. in 000's Crores

8.00%
100 6.00%
4.00%
50

7.51%

9.24%
101
135

79
89

2.00%
- 0.00%
2024 FY 2023 FY 2024 FY 2023 FY
Share Holder Fund Debt Net Profit Margins

Year The trend analysis for Net Profit Margins

2024 FY 2023 FY
DEBT/EQUITY between FY 2023 and FY 2024 shows a decline
1.52 1.29 from 9.24% in 2023 to 7.51% in 2024 although
RATIO
the turnover has increased in FY 2024 as
The trend analysis for the Debt/Equity Ratio compared to FY 2023.This downward trend
between the financial years 2023 and 2024 indicates that the company has become less
shows an increase from 1.29 in 2023 to 1.52 in efficient in converting its revenue into profit over
2024. This upward trend indicates that the the past year. Major factor contributing to this
decrease is higher operating costs, increase in
company has taken on more debt relative to its
finance cost and increase in operating and
equity over the past year. A rising debt/equity direct expenses.
ratio in the present case signifies that the
company is leveraging more debt to finance its
operations or expansion. This trend reflects
strategic decisions by the company to invest in
new projects, acquisitions, or other capital-
intensive activities.

Return on Capital Employed Y-o-Y Asset Turnover Ratio Y-o-Y

Analysis Analysis
9.00% 0.60

7.00%
0.40
5.00%
7.32%

7.71%

0.35

0.20
3.00%
0.15

1.00% -
2024 FY 2023 FY 2024 FY 2023 FY
ROCE (%) Asset/Turnover Ratio

The trend analysis for Return on Capital The Asset Turnover Ratio has increased from
Employed (ROCE) between FY 2023 and FY 0.15 in FY 2023 to 0.35 in FY 2024. The
2024 indicates a slight decline from 7.71% in improvement in this ratio indicates that the

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Comparable Analysis
Grasim Industries Limited & Dalmia Bharat Limited

2023 to 7.32% in 2024. This downward trend company has become more efficient in utilizing
suggests a reduction in the company's efficiency its assets to generate revenue over the period.
in generating profits from its capital employed The significant rise in the ratio suggests that the
over the year. Company is not utilizing its capital firm's sales have grown relative to its asset
as effectively as before, which is due to lower base, which is a positive sign of improved
operational efficiency, increased capital costs, or operational performance.
reduced profitability.

Interest Coverage Ratio Y-o-Y Interest Coverage Ratio Y-o-Y

Analysis Analysis
5.00 15.00
4.00
3.00
10.00
2.00

11.69

9.89
3.07

4.17

1.00
- 5.00
2024 FY 2023 FY 2024 FY 2023 FY
ICR Ratio EV/EBITDA

The Interest Coverage Ratio (ICR) has declined The EV/EBITDA ratio has increased from 9.89
from 4.17 in FY 2023 to 3.07 in FY 2024. This in FY 2023 to 11.69 in FY 2024. This upward
downward trend shows that the company’s ability trend suggests that the company's valuation
to cover its interest expenses has weakened. has grown. The higher ratio indicates that the
Although the ratio is still above 1, indicating that market sees that the company is having greater
the Grasim can meet its interest obligations, the growth potential or lower risk, leading to a
higher valuation.
decrease is due to an increase in interest
expenses, which could be a concern if the trend
continues.

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Comparable Analysis
Grasim Industries Limited & Dalmia Bharat Limited

Cash Flow Statement Analysis FY 2023 – FY 2024

CASH FLOW OF GRASIM INDUSTRIES (in Rs.

2024 FY 2023 FY
Cr.)
NET PROFIT/LOSS BEFORE EXTRAORDINARY 13,611.13 14,517.75
ITEMS AND TAX
Net Cashflow from Operating Activities (10,719.33) (12,685.14)
Net Cash Used in Investing Activities (23,113.20) (13,686.71)
Net Cash Used from Financing Activities 33,908.18 26,469.13
Foreign Exchange Gains / Losses (0.56) (0.61)
Adjustments On Amalgamation Merger Demerger - (24.81)
Others
NET INC/DEC IN CASH AND CASH 75.09 71.86
EQUIVALENTS
Cash And Cash Equivalents Begin of Year 2,312.56 2,240.70
Cash And Cash Equivalents End of Year 2,387.65 2,312.56

Conclusion:
The cash flow statement of Grasim Industries for FY 2024 and FY 2023 shows changes in the
company’s cash management. Although there is a decrease in net profit from Rs. 14,517.75 crore in
FY 2023 to Rs. 13,611.13 crore in FY 2024, it has managed to slightly increase its net cash inflow by
the end of FY 2024. The company experienced a substantial reduction in cash flow from operating
activities, which fell from Rs. (12,685.14) crore in FY 2023 to Rs. (10,719.33) crore in FY 2024.
Additionally, there is uptake in the cash used in investing activities, due to higher capital expenditure.
However, the company compensated for this with a increase in cash flow from financing activities,
which rose from Rs. 26,469.13 crore in FY 2023 to Rs. 33,908.18 crore in FY 2024.The net increase
in cash and cash equivalents was slightly higher in FY 2024 at Rs. 75.09 crore compared to Rs. 71.86
crore in FY 2023, showing that the company was able to maintain and slightly improve its liquidity
position over the two years.

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Comparable Analysis
Grasim Industries Limited & Dalmia Bharat Limited

B. Dalmia Bharat Limited Overview FY 2023 – FY 2024

Debt to Equity Y-o-Y Analysis Net Profit Margin Y-o-Y Analysis

20 8.00%
Rs. in 000's Crores

15 6.00%
10 4.00%

5.80%

3.87%
5 2.00%
16

16
5

4
- 0.00%
2024 FY 2023 FY 2024 FY 2023 FY
Share Holder Fund Debt Net Profit Margins

Year 2024 FY 2023 FY The trend analysis for Net Profit Margins
DEBT/EQUITY RATIO 0.28 0.24 between FY 2023 and FY 2024 shows an
increase from 3.87% in 2023 to 5.80% in
The trend analysis for the Debt/Equity Ratio 2024. This upward trend indicates improved
between the financial years 2023 and 2024 shows ability of the company to convert revenue into
an increase from 0.24 in 2023 to 0.28 in 2024. A profit over the past year. The increase in net
rising debt/equity ratio in the present case profit margins is due to better cost
signifies that the company is leveraging more debt management, increased efficiency.
to finance its operations. This trend reflects
strategic decisions by the company to invest in
new projects or other capital-intensive activities.

Return on Capital Employed Y-o-Y Asset Turnover Ratio Y-o-Y

Analysis Analysis
6.50% 0.80

0.60
6.00%
0.40
5.50%
6.25%

5.44%

0.55

0.54

0.20

5.00% -
2024 FY 2023 FY 2024 FY 2023 FY
ROCE (%) Asset/Turnover Ratio

The trend analysis for Return on Capital Employed The trend analysis for the Asset Turnover
(ROCE) between FY 2023 and FY 2024 shows an Ratio between FY 2023 and FY 2024 shows
increase from 5.44% in 2023 to 6.25% in 2024. a slight increase from 0.54 in 2023 to 0.55 in
This uptake suggests that the company has 2024. This uptake indicates that the company
improved its efficiency in generating returns from has become marginally more efficient in
the capital it employs. A higher ROCE indicates utilizing its assets to generate revenue. An
increase in the Asset Turnover Ratio is
that the company is utilizing its capital more
suggesting the company is using its assets
effectively, leading to increased profitability.
more effectively to produce sales.

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Comparable Analysis
Grasim Industries Limited & Dalmia Bharat Limited

Interest Coverage Ratio Y-o-Y EV/EBITDA Multiple Y-o-Y

Analysis Analysis
12.00 18.00
10.00
8.00 16.00
6.00
14.00

16.26
10.49
4.00
7.65

13.90
2.00
- 12.00
2024 FY 2023 FY 2024 FY 2023 FY
ICR Ratio EV/EBITDA

The trend analysis for the Interest Coverage Ratio The trend analysis for the EV/EBITDA ratio
(ICR) between FY 2023 and FY 2024 shows a between FY 2023 and FY 2024 shows a
decrease from 10.49 in 2023 to 7.65 in 2024. This decrease from 16.26 in 2023 to 13.90 in 2024.
downward trend indicates that the company's A lower EV/EBITDA ratio suggests that the
company is either generating more EBITDA or
ability to cover its interest expenses from its
that its enterprise value has decreased. This
earnings has decreased. This is due to higher
could be seen as a positive sign, as it is
interest expenses, reduced profitability. A dip in implying that the company is undervalued
ICR may raise concerns about the company's compared to its earnings potential.
financial health and its capacity to meet its
financial obligations.

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Comparable Analysis
Grasim Industries Limited & Dalmia Bharat Limited

Cash Flow Statement Analysis FY 2023 – FY 2024

CASH FLOW OF DALMIA BHARAT (in Rs. Cr.) 2024 FY 2023 FY

NET PROFIT/LOSS BEFORE EXTRAORDINARY 123.00 205.00
ITEMS AND TAX
Net Cash Flow from Operating Activities 30.00 11.00
Net Cash Used in Investing Activities 68.00 242.00
Net Cash Used from Financing Activities (175.00) (174.00)
Foreign Exchange Gains / Losses - -
Adjustments On Amalgamation Merger Demerger Others - -
NET INC/DEC IN CASH AND CASH EQUIVALENTS (77.00) 79.00
Cash And Cash Equivalents Begin of Year 80.00 1.00
Cash And Cash Equivalents End gf Year 3.00 80.00

Conclusion:
In FY 2024, the company's net profit before extraordinary items and tax significantly declined to Rs.
123 crores from Rs. 205 crores in FY 2023, indicating a reduced profitability. Despite this, the net
cash flow from operating activities has shown improvement from Rs. 11 crores in FY 2023 to Rs. 30
crores in FY 2024, suggesting that the company managed its operational cash better, perhaps through
more efficient working capital management or improved cash collections. On the investing side,
Dalmia Bharat's cash outflows decreased substantially in FY 2024, with Rs. 68 crores used compared
to Rs. 242 crores in FY 2023. This reduction in investment indicates a pause in expansion effort. The
cash used in financing activities remained stable, with outflows of ₹175 crore in FY 2024 compared
to ₹174 crore in FY 2023. This suggests that the company maintained its approach to managing its
debt or returning capital to shareholders, possibly through consistent dividend payments or debt
repayments. The net impact of these activities resulted in a decrease in cash and cash equivalents
by Rs. 77 crores in FY 2024. The company ended FY 2024 with Rs. 3 crores in cash, as against Rs.
80 crores at the end of FY 2023. This decline in cash reserves indicate liquidity challenges if this trend
continues.

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COMPARABLE ANALYSIS
DLF LINITED & OBEROI REALTY LIMITED

Comparative
Analysis

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COMPARABLE ANALYSIS
DLF LINITED & OBEROI REALTY LIMITED

C. Grasim’s & Dalmia’s Comparative Analysis (FY 2024)

Grasim Dalmia
Particular Industries Bharat Analysis
Limited Limited
Profitability Ratios

Grasim Industries has a significantly higher debt-to-

equity ratio compared to Dalmia Bharat. This
Debt/Equity
1.52 0.28 indicates that Grasim relies more on debt financing,
Ratio
which could mean higher financial risk but also
potential for higher returns if managed well.

Grasim Industries has a higher net profit margin, it

Net Profit is more efficient at converting revenue into actual
7.51 5.80
Margin (%) profit. This is due to better cost management and
economies to scale.

Dalmia Bharat has a higher return on assets, it is

Return on more effective in using its assets to generate profit.
1.36 2.97
Assets (%) This reflects better asset utilization and more
efficient operations.

Dalmia Bharat leads in asset turnover ratio,

Asset Turnover showing it generates more revenue per unit of asset
0.35 0.55
Ratio (%) in comparison to Grasim. This suggests Dalmia
Bharat is more efficient in using its assets to
produce sales.
Conclusion: Grasim Industries is more leveraged with higher debt at the same time also shows
better profitability in terms of net profit margin. Wherein, Dalmia Bharat demonstrates efficiency in
asset utilization and a higher return on assets.
Liquidity Ratio

Dalmia has a much higher current ratio, indicating it

is in a better position to cover its short-term liabilities
Current Ratio 0.93 1.76 with its short-term assets. A current ratio above 1 is
generally considered good liquidity, while the
Grasim company’s ratio below 1 are indicating
potential liquidity issues.

The quick ratio shows that Dalmia is better

positioned to meet its short-term obligations without
Quick Ratio 0.79 1.48
relying on inventory sales. Grasim has lower quick
ratio is indicating it might struggle more to cover its
immediate liabilities.

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COMPARABLE ANALYSIS
DLF LINITED & OBEROI REALTY LIMITED

Dalmia has a higher dividend payout ratio, which

Dividend Payout
11.68 20.46 means it returns a larger portion of its profits to
Ratio (%)
shareholders as dividends as compared to Grasim

Conclusion: Overall, the Dalmia may appears to have stronger liquidity but at the same point
cashflow statement analysis shows otherwise as there is steep decline in the cash balance. Grasim
also, with its lower ratios, might face more challenges in meeting short-term obligations and provides
a smaller return to shareholders in the form of dividends.
Coverage Ratio

Dalmia has a significantly higher Interest Coverage

Ratio of 7.65 compared to Grasim which is at 3.07.
Interest
3.07 7.65 This suggests that the Dalmia is in a much stronger
Coverage Ratio
position to cover its interest expenses from its
operating earnings.

Valuation Ratios

The Grasim has a significantly higher enterprise

value, indicating it is much larger in terms of market
Enterprise Value
332,695.83 41,590.00 capitalization and debt. This means it has more
(Cr.)
assets and resources at its disposal compared to
the Dalmia.

Grasim has a lower EV/EBITDA multiple,

EV/EBITDA suggesting it is undervalued or more efficient in
11.69 13.90
Multiple generating earnings from its enterprise value
compared to Dalmia.

Grasim has a higher earning yield, implying that

Earning Yield 0.04 0.02 investors might expect higher returns on their
investment compared to Dalmia.

Conclusion: Grasim appears to be larger and potentially more efficient in generating earnings
relative to its enterprise value. It also offering a higher earning yield, which could be attractive to
investors seeking better returns.

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COMPARABLE ANALYSIS
DLF LINITED & OBEROI REALTY LIMITED

Sources

1) https://www.dalmiabharat.com/about-us/
2) https://www.dalmiabharat.com/group-overview/
3) https://www.dalmiacement.com/investor/dalmia-bharat-limited/
4) https://www.grasim.com/about-us/who-we-are
5) https://www.grasim.com/investors/results-reports-and-presentations
6) https://www.grasim.com/about-us/leadership

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Comparable AnalysisGrasim Industries Limited & Dalmia Bharat LimitedFINANCIA...

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