Sharekhan's research report on Grasim Industries
The company announced terms for Rs. 4,000 crore rights issue at an issue price of Rs. 1,812 per share, entailing 3.4% equity dilution in-line with street’s expectations. Repayment of debt from the rights issue along with funding balance capex for paints of over Rs. 5,200 crore via a mix of D/E would keep standalone leverage under check and under management’s stated guidance. It remains on track to set up six units with an aggregate capacity of 1332 MLPA by Q4FY2025 with three units to commence operations from Q4FY2024. We expect the paints business to be earnings accretive from FY2026.
Outlook
We retain Buy on Grasim with an unchanged PT of Rs. 2,300, considering a healthy growth outlook for its key subsidiaries and standalone businesses.
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