Grasim Industries - Ambitious Targets For The Paint Business: Motilal Oswal

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Motilal Oswal Report.Grasim Industries Ltd. on February 22, 2024 inaugurated its paint plants at three locations - Panipat (Haryana), Cheyyar (Tamil Nadu), and Ludhiana (Punjab). Construction at other three plants at Chamarajanagar (Karnataka), Mahad (Maharashtra) and Kharagpur (West Bengal) is in full swing and they will be commissioned in phases in FY25. Grasim Industries has the paint business under the brand name, 'Birla Opus'. The company announced its foray into the paint business on January 22, 2021 with an initial capital outlay of Rs 50 billion. Later in May 2022, the management indicated that the capital investments in this business would be Rs 100 billion (cumulative capex stood at Rs 59.96 billion as of December 2023) with an aggregate installed capacity of 1.33 m kl. This capacity will be further increased by 0.5 m kl in the second phase at a much lower cost..Grasim Industries aims to achieve a turnover of Rs 100 billion in the next three years and would become profitable at that time. The sales and distribution network is in place to support the launch of Birla Opus and the company plans to cover all towns with a population of over 100k by July 2024 and 6,000 towns by FY25-end. Grasim will focus on customer satisfaction, product quality, better incentives to contractors, and faster delivery of products (within four hours of placing orders at most of the locations)..We largely retain our earnings per share estimates for FY24-26. Reiterate 'Buy' with a target price of Rs 2,670 as we value its:holding in subsidiary companies by assigning a discount of 40%; standalone business at seven times enterprise value/Ebitda, and paint business at one time of investments. We do not change our assumptions for the paint business as of now and would wait for the scalability of operations. We believe that the value of the company’s paint business is not captured in its current market price..Click on the attachment to read the full report:.Grasim Has The Muscle To Take On Asian Paints. Now It Needs Customer Love.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Grasim Industries - Ambitious Targets For The Paint Business: Motilal Oswal

Aims for revenue of Rs 100 billion and turning profitable in three years

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