AgenciesPromoters held 42.76 per cent stake in the company as of 31-Mar-2022, while FIIs owned 12.71 per cent, DIIs 14.42 per cent.

RelatedBuy Tata Chemicals, target price Rs 1170: Anand Rathi Buy Ashok Leyland, target price Rs 170: ICICI SecuritiesBuy Jyothy Labs, target price Rs 180: ICICI Securities

ICICI Securities has add call on Grasim Industries with a target price of Rs 1580. The current market price of Grasim Industries is Rs 1433.4. Time period given by analyst is one year when Grasim Industries Ltd. price can reach defined target.

Grasim Industries Ltd., incorporated in the year 1947, is a Large Cap company (having a market cap of Rs 93468.08 Crore) operating in Diversified sector.

Grasim Industries Ltd. key Products/Revenue Segments include Sale of Products, Other Operating Revenue, Scrap, Export Incentives, Power, Sale of services for the year ending 31-Mar-2021.

Financials

For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 28991.25 Crore, up 18.22 % from last quarter Total Income of Rs 24523.78 Crore and up 18.19 % from last year same quarter Total Income of Rs 24529.53 Crore. Company reported net profit after tax of Rs 4014.14 Crore in latest quarter.

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Investment Rationale

Grasim Industries’ (Grasim) Q4FY22 standalone EBITDA at Rs7.52bn (down 7%YoY) was below consensus estimates. VSF EBITDA fell to Rs10.6/kg from Rs20/kg QoQ and Rs37/kg YoY owing to continued inflation in pulp, caustic soda, fuel, etc. Chemical pision margin too declined from 23.4% to 20.9% QoQ owing to lower profitability in epoxy segment despite better margins in caustic soda, although it improved sharply from 12.8% YoY. Grasim has doubled its capex guidance in the paints business to Rs100bn over next three years to build 1,332mlpa capacity and expects nationwide launch of the products by Q4FY24. Factoring-in the lower VSF margins, we cut our standalone FY23E-FY24E EBITDA by 7-8%. Also, considering the stock price corrections in Grasim’s various holdings, it reduces target price to Rs1,580/sh (earlier: Rs1,732/sh) based on 9x FY24E EV/E and assuming the holdco discount at 50% (unchanged). Maintain ADD. Key risks: lower demand / pricing in VSF / chemicals.

Promoter/FII Holdings

Promoters held 42.76 per cent stake in the company as of 31-Mar-2022, while FIIs owned 12.71 per cent, DIIs 14.42 per cent.