Grasim lifts operating margin for a third straight quarter
Costs grew slower than revenue year on year, helping profit growth outpace sales despite higher interest expense.
Filed 12 Aug 2026, 14:44 IST · Grasim Industries Ltd (GRASIM)
Key takeaways
- Consolidated operating margin improved for a third straight quarter to 15.95%, up 0.72 percentage points sequentially.
- Revenue grew 21.43% year on year as expenses rose 20.32%, lifting operating profit growth to 27.67%.
- The margin remained 3.01 percentage points below the 18.96% median for 68 reported Commodities peers.
Price around the results
Operating profit held up despite lower sequential revenue
This was a consolidated quarter in which revenue rose 21.43% year on year, while expenses increased 20.32%; the resulting cost spread lifted operating profit by 27.67%. Sequentially, revenue fell 4.67%, but expenses declined faster at 5.48%, leaving operating profit almost unchanged at -0.14%. Net profit increased 39.00% year on year and 1.16% sequentially.
Margin expansion came from cost control, not other income
Operating margin expanded 0.78 percentage points year on year and 0.72 percentage points sequentially because expenses grew more slowly than revenue. The year-on-year tax-rate decline of 2.03 percentage points helped net profit growth, while interest expense increased 12.58%. Other income contributed 6.14% of pre-tax profit, so it supported earnings but was not the main source of the increase.
Margin recovery has now lasted three quarters
Operating margin rose from 12.21% in Q2FY26 to 13.43% in Q3FY26, 15.23% in Q4FY26 and 15.95% in Q1FY27. That is a third consecutive quarter of improvement, although the latest margin was still 3.01 percentage points below the 18.96% median of 68 Commodities peers that have reported.
Management flagged fibre mix gains and ongoing expansion
Management said specialty fibres reached 27% of sales volumes, up from 21% in Q1FY26, helped by exports, while CFY volumes declined 7% year on year because of labour shortages and subdued textile-chain demand. The company said the first 55K TPA phase of its Lyocell expansion was nearing detailed-engineering completion, and that environmental clearance was under progress for the second 110K TPA phase. Management also said the 50K TPA ECH plant at Vilayat was mechanically complete and under commissioning in Q2FY27, while standalone Cellulosic Fibres capex planned for FY27 was Rs 1,603 cr, of which Rs 196 cr was spent in Q1FY27.
No immediate market reaction is available yet
The results are too fresh for a reported post-result stock move. Across eight previous result reactions, the stock rose four times and fell four times, with a median absolute move of 1.10%.
Q1FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹48,716 cr | ₹51,101 cr | -4.67% | +21.43% |
| Other income | ₹318 cr | ₹259 cr | +22.74% | -14.59% |
| Expenses | ₹40,944 cr | ₹43,318 cr | -5.48% | +20.32% |
| Operating profit | ₹7,772 cr | ₹7,783 cr | -0.14% | +27.67% |
| Operating margin (%) | 15.95% | 15.23% | — | — |
| Interest | ₹919 cr | ₹922 cr | -0.35% | +12.58% |
| Depreciation | ₹1,988 cr | ₹2,042 cr | -2.61% | +9.83% |
| Profit before tax | ₹5,183 cr | ₹5,078 cr | +2.06% | +35.20% |
| Tax | ₹1,337 cr | ₹1,276 cr | +4.75% | +25.35% |
| Net profit | ₹3,846 cr | ₹3,802 cr | +1.16% | +39.00% |
| EPS (₹) | ₹31.64 | ₹28.87 | +9.59% | +51.32% |
Operating margin of 15.95% compares with a Commodities sector median of 18.96% across 68 peers that have reported Q1FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Specialty fibre sales volume share improved to 27% from 21% in Q1FY26, led by higher exports.
Guidance & outlook
- Chlorine integration is expected to reach approximately 68% by the exit of FY27.
Expansion
- The first 55K TPA phase of the Lyocell expansion is nearing completion of detailed engineering, with civil work progressing.
- Environmental clearance is under progress for the second 110K TPA phase of the Lyocell expansion.
- The 50K TPA ECH plant at Vilayat is mechanically complete and under commissioning in Q2FY27.
- Standalone FY27 capex planned for Cellulosic Fibres is ₹1,603 crore, with ₹196 crore spent in Q1FY27.
New initiatives
- The chemicals business is evaluating multiple downstream chlorine chemistries to increase chlorine integration.
Problems & risks
- CFY sales volumes declined due to labour shortage and subdued demand in the textile value chain.
What to watch
- Whether consolidated operating margin holds above 15.95% next quarter.
- Management's progress toward its reported 68% chlorine-integration target by the exit of FY27.
- Whether CFY volumes improve from the reported 7% year-on-year decline.