Grasim Industries Ltd. share price target

Grasim Industries (Grasim) has kicked-off FY26 on a strong footing. Its standalone entity’s (SA) Q1FY26 EBITDA has not only beat our estimate (at INR 3.85bn, up 18% YoY; I-Sec: INR 2.55bn), revenues of the new business segments (paints/B2B ecommerce) too have pleasantly surprised; also, EBITDA losses are in check.

GRASIM’s 1QFY26 performance was above our estimates, led by higherthan-estimated profitability in the VSF and chemical segments and revenue in high-growth businesses (Paint and B2B).

*over or under performance to benchmark index driven by higher prices and a favourable product mix. Meanwhile, revenue from the others segment grew 13.7% YoY to Rs. 898cr. EBITDA expanded 5.7% YoY to Rs. 6,548cr, supported by increased revenue. How-...

Standalone revenue grew by 32% y-o-y to Rs. 8,926 crore while EBITDA was at Rs. 221 crore fell 58% y-o-y. In Q4 Cellulosic Fibre revenue grew by 8% y-o-y While EBITDA de-grew by 36% y-o-y due to increased key input costs.

At our recently hosted Grasim Industries’ (Grasim) Investors Meet, the management exuded confidence on further ramp-up of its new paint business.

Grasim’s standalone EBITDA of Rs. 271 crore fell 48% y-o-y and 17% q-o-q with decline in operating profit of Cellulosic fibres and textile business but mitigated a little by the chemical business.

We retain Buy on Grasim with a revised PT of Rs. 2,975, led by marginal downward revision in
valuation of Aditya Birla Capital and Vodafone Idea.

Grasim Industries 4QFY24 EBITDA grew 24% YoY to INR5.3b (est. INR5.1b)
and OPM surged 1.4pp YoY to 7.8% (est. ~8%). The VSF segment posted an
EBITDA/kg of INR21 (est. INR18).

Despite weak commodity prices (both VSF and chemicals), Grasim Industries posted ~440bps QoQ improvement in EBITDA margin led by low raw material prices and controlled fixed costs. Factoring-in the near-term weakness in chemicals business and pre-operative expenses incurred towards new businesses (of b2b e-commerce and paints), we prune our FY24E EBITDA estimate by ~5%, but keep FY25E estimates largely unchanged.

Grasim Industries’ (Grasim) Q4FY23 standalone EBITDA plunged 43% YoY/11% QoQ, being 33% below estimates. VSF margin slipped ~300bps YoY though it recovered 180bps QoQ. As for chemicals segment, margin dipped ~470bps YoY and 350bps QoQ.