Grasim Industries' rights issue will strengthen balance sheet, fuel growth

Caustic soda prices may have bottomed out and started to improve from lows and should be higher in Q3FY24

Grasim Industries has announced a rights issue of around Rs 4,000 crore with the promoters committed to fully subscribing to their entitlements and to covering any unsubscribed po­r­tion. This is to part-fund capital expenditure (capex) of Rs 10,000 crore in a new foray into the paints business. The company has already invested Rs 3,640 crore in the paints business (by Q1FY24). The management has outlined a capex of Rs 5,700 crore for FY24, which includes Rs 4,280 crore allocated for the paints business, of which Rs 1,050 crore has already been spent in Q1FY24.

The higher capex and tighter