Buy Grasim; target of Rs 3410: Motilal Oswal

Motilal Oswal's research report on Grasim

GRASIM’s 2QFY26 EBITDA was above our estimate, fueled by outperformance in the chemical business, while the VSF performance was in line. EBITDA increased ~13% YoY to INR3.7b (~14% beat). OPM contracted 50bp YoY to 3.8% (est. 3.5%). Adj. PAT grew ~6% YoY to INR8.0b (in line). However, Mr. Rakshit Hargave, CEO of the Paints business, who had joined GRASIM in Nov’21, has tendered his resignation after ~20 months of the launch of its paints brand “Birla Opus”. This will be an overhang on the stock in the near term.

Outlook

We reiterate our BUY rating with a TP of INR3,410 as we value its: 1) holding in listed subsidiaries by assigning a discount of 40% on our TP for coverage companies, 2) standalone business at 6x Sep’27E EV/EBITDA, 3) paint business at 2x of investments, 4) B2B e-commerce at 1.5x of Sep’27E (TTM) revenue, and 5) renewable business at 10x EV/EBITDA.