Buy Grasim Industries; target of Rs 1950: Sharekhan

Sharekhan's research report on Grasim Industries

Grasim Industries Limited (Grasim) reported a big miss on standalone net earnings, led by a sharp contraction in the chemical division’s operating margins, owing to weak demand, dip in realisations, and higher input costs. Viscose utilisation levels are expected to remain stable with gradual improvement in OPMs in FY2024. The chemical division may face near-term headwinds, led by a weak pricing environment. Paints and B2B commerce business phase-wise launch remain on track from Q4FY2024 and Q2FY2024, respectively. Capex on improving asset productivity and value-added products in viscose and chemicals.

Outlook

We retain Buy on Grasim with a revised PT of Rs. 1,950, as we pencil in upwardly revised valuation of UltraTech, partially getting offset by downwardly revised valuation of its standalone business.

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