Grasim vs Bajajfinsv Q2 FY24

Grasim's Q2 FY24 consolidated revenue grew 10% YoY to INR 30,221 crore, with EBITDA up 14% to INR 4,509 crore, driven by cement and financial services. Standalone revenue rose 4% to INR 6,442 crore, while EBITDA jumped 21% to INR 1,354 crore on higher VSF volumes (+24% YoY) and lower input costs. However, global price weakness in viscose and chloralkali persisted, and new businesses (paints, B2B e-commerce) incurred initial losses. Management guided for paints commercial launch in Q4 FY24 with three plants operational, and B2B platform Birla Pivot nearing INR 100 crore monthly run rate. Risks include sustained global demand softness in textiles and chemicals, and potential margin pressure from volatile input costs.

Guidance read

Paints commercial launch in Q4 FY24: Three plants (Panipat, Ludhiana, Cheyyar) have received consent to operate and will be operational in Q4 FY24, with product launch in the same quarter. Epoxy capacity expansion commissioning in Q3 FY24: The expanded epoxy capacity is under commissioning and expected to be operational in Q3 FY24. Renewables capacity of ~1 GW to be commissioned by Q1 FY25: Projects under implementation of about 1 GW are expected to be commissioned by next year's first quarter. Debt-to-EBITDA not to exceed ~3.5x: Even with full paints CapEx next fiscal, debt-to-EBITDA is not expected to cross about 3.5x.

Risk read

Key risks include Sustained global textile demand weakness — International brands continue to hold elevated inventories, suppressing demand for VSF and VFY; recovery timeline remains uncertain.; Volatile input costs — Caustic soda, sulfur, coal, and oil prices are volatile; recent stabilization and upticks could pressure margins.; Paints business profitability impact — Initial costs from paints business are being charged to P&L, with losses expected to persist until commercial launch and scale-up.; VFY pricing pressure from Chinese imports — Anti-dumping duty on VFY is only at DGTR recommendation stage; Chinese imports continue to pressure domestic prices due to low domestic consumption in China..

Promise ledger

Of 1 tracked promise, management 0 met, 0 close, 1 missed.

Bajaj Finserv delivered a strong Q2 FY24 with consolidated revenue up 25% YoY to INR 26,023 crore and PAT up 24% YoY to INR 1,929 crore. Growth was driven by robust performance across subsidiaries: BAGIC reported a 95.3% combined ratio (lowest in 14 quarters) and 39% PAT growth, while BALIC saw NBV growth of 25% to INR 237 crore. BFL continued its momentum with 33% AUM growth and asset quality improvement. The AMC business launched with INR 5,235 crore AUM. Management guided for continued balanced growth, with BAGIC targeting sub-100% combined ratio despite near-term investment costs. Key risk: elevated claims volatility in government health and crop insurance segments could pressure underwriting profitability.

Guidance read

BAGIC combined ratio to be slightly above 100% for next few quarters: Due to investments in manpower and rural expansion, combined ratio may temporarily exceed 100% before normalizing. BALIC NBV growth expected to continue with product mix improvement: Management expects NBV growth to sustain as par product mix improves and new bank partnerships contribute. BFL to maintain long-term financial guidance metrics: BFL continues to deliver on AUM growth, profitability, and asset quality targets as per its stated guidance.

Risk read

Key risks include Government health business claims volatility — The Gujarat government health scheme may have higher loss ratios due to backlog claims, though 80% is reinsured.; Expense ratio normalization pressure — BAGIC's expense ratio may rise as investments in manpower and rural branches continue, impacting near-term profitability.; Competition in crop insurance and government health — Analyst raised concern about sustainability of crop and government health business given competitive pricing and tender-based nature.; BALIC VNB margin compression from product mix shift — Higher share of lower-margin products (ULIP, non-par) and investments in new channels may keep VNB margins below prior year levels..

Promise ledger

Of 2 tracked promises, management 0 met, 0 close, 2 missed.