Sharekhan has given Buy recommendation for Grasim Industries with a target price of Rs. 1740 in its research report issued on May 24, 2022
Sharekhan’s research report on Grasim Industries
Grasim reported better-than-expected standalone revenues for Q4FY2022 led by strong growth in both viscose and chemicals. OPM was hit by the weak performance of the VSF division. Adjusted standalone net profit was up 12% y-o-y. The company would be expediting its paint venture with a revised project cost of Rs. 10,000 crore by FY2025 to become the second largest profitable paint company with an installed capacity of 1332MLPA. The details regarding debt to equity funding of paints business and capex plan for existing business are awaited. Healthy standalone cash surplus and strong cash flow expected from existing businesses to support faster execution in paints.
We retain a Buy on Grasim with a revised PT of Rs. 1,740 factoring in our revised valuation for Ultratech and downwardly revised estimates for standalone operations.