Grasim Industries: Citi Hikes Price Target Despite Exit Of Birla Opus CEO
Analysts noted the sudden exit of Hargave could spur near-term caution. Citi noted that the exit could 'cause some concerns around direction' for the paints division of Grasim, pending a successor.
Brokerages remain bullish on Grasim Industries Ltd. despite the recent exit of Rakshit Hargave as the CEO of Birla Opus, with Citi even issuing a target price hike.
The brokerage firm has retained a 'buy' rating on the counter while increasing the target from Rs 3,400 to Rs 3,450. Jefferies and Morgan Stanley, too, remain optimistic about Grasim's stock price trajectory going forward.
The positive feedback from brokerages comes in the midst of Birla Opus continuing to gain market share and posing a strong challenge to established players such as Asian Paints and Berger Paints.
However, brokerages did note that the sudden exit of Rakshit Hargave as the CEO of the Paints business, calling it a 'negative surprise'.
After overseeing the launch of Birla Opus over the last 18 months, Hargave is set to return to the fast-moving consumer goods space by joining Britannia as Executive Director and CEO.
Analysts noted that the sudden exit of Hargave could spur near-term caution. Citi noted that the exit could 'cause some concerns around direction' for the paints division of Grasim, pending a successor.
Jefferies, which has also maintained a 'Buy' rating with a Rs 3,500 target, said investor sentiment may be "cautious" given Hargave’s active role in scaling the business against tough competition.
Hargave, after all, has been credited with leading the disruptive launch of Birla Opus 18 months ago. He has a strong track record, including turning Nivea India into a leading skincare company and introducing the 30-minute guarantee at Domino's.
Brokerages remain positive on Grasim, particularly after the company's strong September quarter earnings. Morgan Stanley called the Q2 earnings a 'strong Ebitda beat' with paint market share accelerating fast. The firm maintained Grasim as a 'top pick', with an overweight rating and a target price of Rs 3,690.
