Buy Grasim; target of Rs 3500: Motilal Oswal

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Motilal Oswal's research report on Grasim

GRASIM’s 1QFY26 performance was above our estimates, led by higherthan- estimated: 1) profitability in the VSF and chemical segments and 2) revenue in high-growth businesses (Paint and B2B). Standalone EBITDA increased ~18% YoY to INR3.8b (~74% beat). OPM contracted 55bp YoY to 4.2% (vs. 2.5% est.). It reported a net loss of INR1.2b vs. a net loss of INR521m in 1QFY25 and INR2.1b in 4QFY25.

Outlook

We reiterate our BUY rating with a TP of INR3,500 as we value its: 1) holding in listed subsidiaries by assigning a discount of 35% on our TP for coverage companies, 2) standalone business at 6x Jun’27E EV/EBITDA, 3) paint business at 2x of investments, 4) B2B e-commerce at 1.5x of Jun’27E (TTM) revenue, and 5) renewable business at 10x FY27E EV/EBITDA.

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