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HDFC Securities Institutional Equities
Grasim Industries Ltd. launched its decorative paints business under the brand ‘Birla Opus Paints’ on February 22, 2024. It commenced production at three facilities located in Panipat (Haryana), Ludhiana (Punjab), and Cheyyar (Tamil Nadu). Three additional plants are scheduled to be commissioned in Chamarajanagar (Karnataka), Mahad (Maharashtra), and Kharagpur (West Bengal) in phases throughout FY25.
Together, these six plants will have a combined installed capacity of 1.33 million KL, with plans for expansion by another 0.5 mn KL in Phase II.
Grasim has already spent ~Rs 60 billion of the 100 billion capital outlay earmarked for paints (as of Q3 FY24). The management has set itself an ambitious target of hitting Rs 100 billion in revenue and achieving profitability within three years, which we view as challenging due to potential distribution bottlenecks.
Nevertheless, Grasim could potentially capture a fair market share among top paint companies due to its-
strategic focus on milking white spaces across price points and
leveraging distribution weaknesses of competitors ranked second and below.
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