Grasim Industries Ltd. share price target

We believe GRASIM has a compelling structural long-term investment case underpinned by an improving VSF earnings cycle, a stable margin in the chemicals business due to the company’s focus on specialty chemicals, and a long-term growth opportunity in decorative paints.

*over or under performance to benchmark index Grasim Industries Ltd, a subsidiary of Aditya Birla Group, is a diversified company with interests in cements, textiles, retail and chemicals. It is also the world's largest...

Grasim Industries’ (Grasim) Q2FY26 EBITDA, at INR 3.66bn, fared better than our INR 3.26bn forecast – driven by betterthan-expected performance from the CSF and other small segments. For its paints business (Birla Opus), while revenues dipped marginally QoQ, the segment nonetheless gained market share with industry revenues likely having declined, both on a YoY and QoQ basis.

GRASIM’s 2QFY26 EBITDA was above our estimate, fueled by outperformance in the chemical business, while the VSF performance was in line. EBITDA increased ~13% YoY to INR3.7b (~14% beat).

Grasim Industries (GRASIM) organized an interaction with senior management, who shared their perspectives on the Paints business and highlighted new initiatives being implemented in this segment.

Grasim Industries (Grasim) has kicked-off FY26 on a strong footing. Its standalone entity’s (SA) Q1FY26 EBITDA has not only beat our estimate (at INR 3.85bn, up 18% YoY; I-Sec: INR 2.55bn), revenues of the new business segments (paints/B2B ecommerce) too have pleasantly surprised; also, EBITDA losses are in check.

GRASIM’s 1QFY26 performance was above our estimates, led by higherthan-estimated profitability in the VSF and chemical segments and revenue in high-growth businesses (Paint and B2B).

*over or under performance to benchmark index driven by higher prices and a favourable product mix. Meanwhile, revenue from the others segment grew 13.7% YoY to Rs. 898cr. EBITDA expanded 5.7% YoY to Rs. 6,548cr, supported by increased revenue. How-...

Standalone revenue grew by 32% y-o-y to Rs. 8,926 crore while EBITDA was at Rs. 221 crore fell 58% y-o-y. In Q4 Cellulosic Fibre revenue grew by 8% y-o-y While EBITDA de-grew by 36% y-o-y due to increased key input costs.

At our recently hosted Grasim Industries’ (Grasim) Investors Meet, the management exuded confidence on further ramp-up of its new paint business.

Grasim’s standalone EBITDA of Rs. 271 crore fell 48% y-o-y and 17% q-o-q with decline in operating profit of Cellulosic fibres and textile business but mitigated a little by the chemical business.

We retain Buy on Grasim with a revised PT of Rs. 2,975, led by marginal downward revision in
valuation of Aditya Birla Capital and Vodafone Idea.

Grasim Industries 4QFY24 EBITDA grew 24% YoY to INR5.3b (est. INR5.1b)
and OPM surged 1.4pp YoY to 7.8% (est. ~8%). The VSF segment posted an
EBITDA/kg of INR21 (est. INR18).

Despite weak commodity prices (both VSF and chemicals), Grasim Industries posted ~440bps QoQ improvement in EBITDA margin led by low raw material prices and controlled fixed costs. Factoring-in the near-term weakness in chemicals business and pre-operative expenses incurred towards new businesses (of b2b e-commerce and paints), we prune our FY24E EBITDA estimate by ~5%, but keep FY25E estimates largely unchanged.