Grasim Industries Can Rally Upto 28% Says Motilal Oswal Maintaining 'Buy' —  Here's Why

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Motilal Oswal Report

Grasim Industries Ltd.'s traction in the paints and B2B e-commerce businesses has exceeded our expectations, with steady revenues and market share growth over the past few quarters. Although losses in these new business verticals seem to have peaked, the key monitorable for us will be the reduction of losses over the next few quarters.

We expect the combined Ebitda of the VSF and chemical business segments to clock a CAGR of ~8% over FY25-28. We have projected the chemical segment’s operating profit margin at 13.7%/13.2%/13.8% in FY26/27/28E vs 14.7% in FY25.

We have estimated Ebitda/kg of VSF at Rs 12.7/Rs 15.9/Rs 17.7 in FY26/27/28E vs Rs 14.7 in FY25.

We reiterate our Buy rating on the stock with a target price of Rs 3,550, as we value its:

1. holdings in listed subsidiary companies by assigning a discount of 35%,

2. standalone business at 6x Sep’27E EV/Ebitda,

3. paints business at 2.0x of investments,

4. renewables business at 10x EV/Ebitda, and

5. B2B e-commerce at 1.5x of Sep’27E revenue.

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