Cement · investment research
Grasim Industries
GRASIM
Verdict
NO ACTION
medium confidence · 3-5 years
Composite score
54/100
Weighted across all eight pillars
Business quality
65/100
Moat, returns, balance sheet, cash, management
Valuation score
36/100
At 28.9x against a sector median of 28.9x, the price embeds roughly 15% earnings growth. Anything less has to come out of the multiple.
Decision intelligence
Every conclusion states what would make it wrong
WHAT
No action. Nothing here is compelling enough to deploy capital today.
WHY
- • Cash conversion scores 89/100 (stable) — Reported profit is backed by operating cash.
- • Balance sheet scores 87/100 (improving) — Leverage is serviceable from current cash generation.
- • Growth quality scores 17/100 (deteriorating) — Top-line compounding over the reported history.
- • Profitability & returns scores 64/100 (deteriorating) — ROCE was 24.9% a year ago. Sustained ROCE above the cost of capital is what compounds value.
WHERE
Cement · Mid cap · position sized to at most 0% of an equity portfolio.
WHEN
Re-run this analysis after the next quarterly result.
WHAT IF WRONG
- • The thesis is wrong if ROCE falls below 18% or cash conversion stays under 70% for two straight quarters.
- • Valuation support fails below ₹3,565 of fair value — a drawdown to that level is a re-underwrite, not automatically a buy.
- • Watched risk: Promoter pledge — 14.5% of promoter holding is pledged.
WHAT NEXT
- • Read the latest quarterly cash-flow statement alongside the P&L.
- • Check GDP growth — it moves the earnings base independently of execution.
- • Compare against the sector peers listed below before sizing anything.
Grasim Industries is a competitively exposed cement business compounding revenue at 6.8% and profit at -8.6%, earning 21.7% on capital. Quality scores 65/100 and valuation 36/100 at 28.9x. The decision is therefore no action with medium confidence — this is analysis for learning, not investment advice.
What does this business actually do?
Business understanding before ratios
Grasim Industries operates in the Indian cement sector with a mid-cap footprint and a listed market value of about ₹168k Cr.
Revenue is earned across 4 reported segments; profitability is driven by realisations, mix and operating leverage rather than one-off items.
Revenue drivers
- • Volume growth in the core segment
- • Realisation / pricing power
- • Mix shift toward higher-margin lines
- • Capacity utilisation
Cost drivers
- • Raw material and input costs
- • Employee cost inflation
- • Depreciation from recent capex
- • Distribution and marketing spend
Moat · 30/100
Cost leadership
Scale and integrated operations keep unit costs below most listed peers.
Segment mix
Growth 25.3% · margin 8.1% — Fastest growing part of the mix — watch whether margins hold as it scales.
Growth 36.5% · margin 18% — Fastest growing part of the mix — watch whether margins hold as it scales.
Growth 2.1% · margin 29.3% — Growing broadly in line with the overall business.
Growth 11.8% · margin 20.8% — Growing broadly in line with the overall business.
Analysis pillars
Score, trend and the drivers behind each — no bare numbers
Business & moat
41/100Trend: improving · weight 14%
- MoatCost leadership
Scale and integrated operations keep unit costs below most listed peers.
- Segment concentrationGrey cement is 8.3% of revenue
Revenue is spread across segments, which softens single-market shocks.
- EBITDA margin21.0%
Margin moved from 18.0% to 21.0% year on year.
Profitability & returns
64/100Trend: deteriorating · weight 16%
- ROCE21.7%
ROCE was 24.9% a year ago. Sustained ROCE above the cost of capital is what compounds value.
- ROE19.2%
Return on equity after leverage — read alongside debt levels.
- Net margin9.5%
Share of every rupee of revenue that reaches reported profit.
Growth quality
17/100Trend: deteriorating · weight 15%
- Revenue CAGR (4y)6.8%
Top-line compounding over the reported history.
- Profit CAGR (4y)-8.6%
Profit lags revenue, so growth is being bought with margin.
- Growth sourceAsset-light / incremental
Capex is 4.0% of revenue this year.
Balance sheet
87/100Trend: improving · weight 12%
- Debt / EBITDA0.47x
Leverage is serviceable from current cash generation.
- Debt / equity0.22x
Capital structure relative to shareholder funds.
- Working capital66 days
Cycle is tight, so growth is largely self-funding.
Cash conversion
89/100Trend: stable · weight 13%
- OCF / PAT118%
Reported profit is backed by operating cash.
- Free cash flow₹5,524 Cr
Cash left after maintaining and expanding the asset base.
Management & governance
44/100Trend: improving · weight 14%
- Guidance delivery65% of last 8 quarters
Whether management historically delivered what it promised.
- Promoter holding56.8% (+1.76 y/y)
Promoter ownership is stable or rising.
- Pledge14.5% pledged
Pledged promoter shares add forced-selling risk in a drawdown.
- Institutional flowFII +1.26 · DII +2.19
Direction of institutional ownership over the last year.
- Capital allocationSurplus cash is largely returned to shareholders…
Surplus cash is largely returned to shareholders rather than reinvested.
Industry & macro
49/100Trend: stable · weight 8%
- Demand trendstable
Cement (India) demand is stable.
- StructureFragmented
Fragmented — share shifts are possible but price competition is real.
- Competitive intensityhigh
How hard it is to keep pricing and share.
- Macro driversGDP growth, Inflation, Interest rates
Variables that move the earnings base regardless of company execution.
Valuation
36/100Trend: stable · weight 8%
- P/E vs sector28.9x vs 28.9x
At 28.9x against a sector median of 28.9x, the price embeds roughly 15% earnings growth. Anything less has to come out of the multiple.
- Growth-adjusted28.90 (PE/growth)
Below ~1.5 the multiple is supported by growth; above ~2.5 it depends on the market staying optimistic.
- FCF yield3.29%
Cash return on the current market value, before any growth.
Financial history
Profit, cash and returns over five reported years
| Year | Revenue | EBITDA | PAT | OCF | FCF | ROCE |
|---|---|---|---|---|---|---|
| FY2022 | ₹59,364 Cr | ₹18,996 Cr | ₹10,448 Cr | ₹11,493 Cr | ₹4,369 Cr | 20% |
| FY2023 | ₹63,831 Cr | ₹17,873 Cr | ₹11,081 Cr | ₹12,411 Cr | ₹5,390 Cr | 24.5% |
| FY2024 | ₹68,298 Cr | ₹18,440 Cr | ₹10,142 Cr | ₹11,562 Cr | ₹4,049 Cr | 17.9% |
| FY2025 | ₹72,765 Cr | ₹13,098 Cr | ₹9,169 Cr | ₹10,636 Cr | ₹4,815 Cr | 24.9% |
| FY2026 | ₹77,233 Cr | ₹16,219 Cr | ₹7,299 Cr | ₹8,613 Cr | ₹5,524 Cr | 21.7% |
No accounting-quality flags in the sample data.
Ownership & management
Who owns it, and have they delivered?
Promoter
56.8%
+1.76 y/y
Pledge
14.5%
Forced-selling risk
FII
3.2%
+1.26 y/y
DII
23.3%
+2.19 y/y
Guidance delivered in 65% of the last eight quarters; average leadership tenure 11 years.
Surplus cash is largely returned to shareholders rather than reinvested.
- ⚠ Related-party transactions at 7.7% of revenue
Industry & macro context
Cement (India)
Demand trend
stable
Cyclicality
medium
Competition
high
Regulatory pressure
low
Fragmented — share shifts are possible but price competition is real.
Macro drivers: GDP growth · Inflation · Interest rates
Valuation
fair versus the sector
P/E
28.9x
Sector median P/E
28.9x
P/B
4.99x
Earnings yield
3.46%
FCF yield
3.29%
PE / growth
28.9
Estimated fair-value band ₹3,565 – ₹4,555 , built on FY2026 EPS of ₹111.2. Gap to the current price: +58.6%. Ranges are a modelling output, not a target price.
At 28.9x against a sector median of 28.9x, the price embeds roughly 15% earnings growth. Anything less has to come out of the multiple.
Risk register
What can break the thesis, and how it is monitored
- Promoter pledgemedium
14.5% of promoter holding is pledged.
Monitor: Pledge disclosures with each shareholding filing.
- Governancehigh
Related-party transactions at 7.7% of revenue
Monitor: Annual report disclosures and auditor commentary.
Ongoing thesis monitoring
The thesis is a living position, not a one-time verdict
| Metric | Currently | Thesis holds if | Thesis breaks if |
|---|---|---|---|
| ROCE | 21.7% | stays above 19% | falls for two consecutive years |
| Cash conversion | 118% | stays above 80% | drops below 70% while revenue grows |
| Revenue growth | 6.8% CAGR | tracks the 15% priced in | slows for two quarters with no margin offset |
| Promoter holding | 56.8% | stable or rising | falls sharply or fresh pledge appears |
Peers in the same sector
Compare before sizing anything
Data quality 72/100
Stated openly, as required by the product principles
- • Fundamentals in this build come from a deterministic sample dataset, not licensed exchange filings.
- • Segment, ownership and management figures are illustrative and must be verified against annual reports.
- • Educational analysis only — not a recommendation to buy or sell any security.