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Sprng deal could deliver fresh spark to drive Grasim revenue
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ET Intelligence Group: The logistics sector is expected to post a healthy revenue growth in the June quarter, driven by sustained demand from e-commerce and quick-commerce channels, rising supply-chain outsourcing, and improving freight activity across segments. Volume growth, network expansion and customer additions are likely to support top line performance for most companies.However, elevated fuel costs, pricing pressure in select segments and integration-related expenses are expected to weigh on profitability, resulting in a mixed margin outlook across the sector.Container Corporation of India (CONCOR) is expected to deliver healthy quarter led by 8% growth in import-export volumes and 15% growth in domestic volumes. It could face realisation pressure and domestic bottlenecks, although gradual traction in dedicated freight corridor (DFC) supports efficiency gains. While operating margin before depreciation and amortisation (Ebitda margin) is expected to improve driven by recovery in domestic business, its extent may be limited given the weakness on pricing front.AgenciesThe drive is on Strong volumes underpin growth, while fuel costs, pricing pressure keep the margin outlook mixedDelhivery's revenue is expected to rise in double digits led by volume growth, consolidation of Ecom Express, continued expansion in express parcel and PTL businesses. However, realisation per shipment may decline in express parcel due to rising lower valued orders in the mix. Integration expenses, higher fuel costs and employee expenses may weigh on margins in the near term. Net profit is expected to decline due to cost pressure and added integration costs.For Blue Dart Express, revenue is likely to grow in mid-single digit supported by volume growth across both air and surface express segments. Analysts expect Ebitda margins to improve aided by pricing discipline, network optimisation and better realisations. Diesel and aviation turbine fuel (ATF) prices will be key factors influencing profitability and margins.TCI's revenue may rise in double digits led by the supply chain and freight segments. Over the medium term, the company expects supply chain revenue to grow 13-15%, supported by a healthy contract pipeline and continued demand for warehousing services. Key monitorables include the pace of freight volume recovery, the ability to pass on higher fuel costs to customers and margin performance in the seaways business amid elevated bunker fuel prices.
ET Intelligence Group: Grasim Industries' acquisition of Sprng Energy is a strategic bet on India's fast growing solar power sector, which is expected to help its renewable energy business outpace the group's overall revenue growth. Revenue of renewable energy business is estimated to surge 382% to ₹4,446 crore by FY28, compared with a 31% anticipated increase in the group's consolidated revenue at ₹53,736 crore, according to Motilal Oswal Financial Services. Analysts estimate the segment currently generates around ₹900 crore in annual revenue, accounting for about 2% of the group's revenue. Its share is expected to rise to around 8% by FY28.The company's renewable business has been showing momentum, with year-on-year 60% growth in revenue at ₹251 crore and 55% growth in operating profit before depreciation and amortisation (Ebitda) at ₹199 crore.AgenciesBuilding materials remains Grasim's largest business. With ₹1 lakh crore in revenue, the division contributed 58% to FY26 revenue. Financial services, the second largest segment, contributed 26% while cellulosic fibres accounted for 10% of revenue. The remaining 6% share was of chemicals segment.The implied acquisition cost of ₹17,200 crore for a five giga watt (GW) capacity is below the current investment required to develop a comparable greenfield solar project. This translates into an implied valuation of about ₹3.4 crore per mega watt (MW). The portfolio comprises of around 3.3 GW of operational assets and 1.7 GW capacity under construction. According to the industry estimates, a greenfield solar power project in India currently costs around ₹4 crore to ₹5.5 crore per MW, implying that Grasim has acquired Sprng's portfolio at a discount.However, the acquisition is expected to increase the financing burden. Since the deal will be funded through a mix of debt and equity, interest costs are likely to rise, which may weigh on near-term profitability. However, Grasim's leverage remains moderate, with a debt-to-equity ratio of 0.3 (excluding borrowings related to its financial services business) and net debt of ₹36,915 crore at the end of FY26. This indicates the company has sufficient balance sheet capacity to absorb the additional debt.According to Motilal Oswal Financial Services, the acquisition is likely to be largely debt funded, with Grasim's equity contribution estimated at around ₹2,430 crore. The higher borrowing costs may reduce the company's standalone FY28 earnings per share (EPS) estimates by about 8%.
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