Motilal Oswal bullish on Grasim as mgt sets eye on market domination

Motilal Oswal reiterated its 'Buy' rating on Grasim stock with a target price of ₹3,550, an upside of 28 per cent from Thursday's close

Motilal Oswal Financial Services said Grasim Industries' management remains focused on capturing market share in its paints business as a near-term priority, aided by initiatives such as product warranties and financing schemes to attract customers.

 

The brokerage reiterated its 'Buy' rating on the stock with a target price of ₹3,550, an upside of 28 per cent from Thursday's close. 

 

Analysts highlighted that Grasim continues to guide for ₹10,000 crore in revenue from paints by the financial year 2028 (FY28), the third year of full-scale operations, with profitability at the operating level. At that scale, the company expects to emerge as the No. 2 player in the decorative paints market.

 

India's organised decorative paints industry is estimated at ₹56,000-57,000 crore, with the unorganised segment's share declining to about 25 per cent from 30 per cent a few years ago, Motilal Oswal said. A large number of players hold only 1-5 per cent market share, underscoring the scope for consolidation, it added 

 

The brokerage noted there has been no escalation in Grasim's ₹10,000 crore project cost for the paints venture. It also said traction in the paints and B2B e-commerce businesses has exceeded expectations, with losses in these new verticals likely peaking.

 

Motilal Oswal expects the combined Ebitda of Grasim’s viscose staple fibre and chemicals segments to deliver a compound annual growth rate of about 8 per cent over the FY25-28. 

 

Last month, at its 78th annual general meeting (AGM), Chairman Kumar Mangalam Birla told shareholders that Grasim has reached an all-time high market value of about ₹1.95 trillion.

 

“FY25 was, in every sense, a landmark year,” Birla said. “Our consolidated revenue surged to nearly ₹1.5 trillion, a testament to the scale, resilience, and momentum of the enterprise that we continue to build.”

Grasim stock price history

Share of Grasim fell over 1 per cent on Friday amid a broader fall in the market. The company's stock fell as much as 1.53 per cent during the day to ₹2,736.2 per share. The stock pared losses to trade 0.6 per cent lower at ₹2,759 apiece, compared to a 0.57 per cent advance in Nifty 50 as of 1:15 PM. 

 

Shares of the company fell for the sixth straight session. The counter has risen 13 per cent this year, compared to a 5 per cent advance in the benchmark Nifty 50. Grasim has a total market capitalisation of ₹1.8 trillion.