Grasim Industries share price hits 52-week high as Jefferies maintains ‘Buy’ on optimism over paints business

Grasim Industries share price gained over 2% to hit a 52-week high of ₹2,722.95 apiece on the BSE on Friday after foreign brokerage firm Jefferies maintained its bullish stance on the stock, expecting an upside potential of 12%.

Jefferies maintained its ‘Buy’ rating on Grasim Industries shares with a target price of ₹3,000 apiece. It values Grasim’s paint business - Birla Opus - at ₹23,700 crore (at ₹348 per share). 

The brokerage firm said it was positively surprised, with higher confidence on the company’s delivery with the right preparedness and focus on bringing out research-led industry best products. 

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Grasim Industries is also ramping up its advertising campaign, while improving product availability across multiple geographies.

The brokerage firm believes the company appears well prepared on most fronts, including product, manufacturing capacity, distribution, marketing, etc. 

“We came back more confident in the company’s ability to deliver on its steep revenue targets. We believe valuation unlocking of paints and narrowing of HoldCo over time will play out as the entry into consumer-oriented business like paints starts to attain milestones on product quality, dealer network, revenues, and profitability,” Jefferies said.

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The brokerage has a bullish view as it believes improved visibility on success here could rerate standalone business and holding company discount.

Birla Opus maintained a target to onboard 50,000 dealers, covering 6,000 towns and 150 depots, by FY25 end. It is building the second largest network of dealers within the first year.

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According to Jefferies, the key downside risks for Grasim Industries include delay in global recovery depressing textiles and chemicals demand, delay in ramping up of new capacities, and volatility in VSF and chemicals prices due to increase in global supply.

Grasim share price has gained over 18% in the past three months and more than 26% year-to-date (YTD). Grasim shares have delivered over 56% returns in one year.

At 11:15 am, Grasim Industries shares were trading 1.35% higher at ₹2,705.00 apiece on the BSE.

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