Motilal Oswal retained its ‘Buy’ rating on Grasim Industries with a target price of Rs 3,770, implying an upside of more than 18%. This is on the back of the high-growth Viscose Staple Fibre (VSF) segment, the efficient chemical category, the scaling paint business, and a few other factors.
Here is a detailed analysis of Motilal Oswal’s investment rationale –
Constructive medium-term outlook for the VSF business
Motilal Oswal remains highly confident about Grasim Industries’ Viscose Staple Fibre (VSF) segment due to favourable global consumption trends and its status as the fastest-growing major fibre category.
Globally, VSF registered a 4% CAGR between CY15-25, while in India, it grew by 9%, significantly outperforming stagnant cotton consumption. With VSF’s share in the global fibre mix rising to 7%, the market is projected to expand to 8.4 million tonnes by CY31, led by stable demand from the Asia-Pacific region.
Grasim Industries is aggressively expanding its Lyocell capacity to 210ktpa by FY30, which will make it one of the largest global producers. Furthermore, strong pricing trends in China and the company’s backward integration into pulp and caustic soda help manage raw material volatility and enhance blended realisations.
Strategic integration and efficiency in the chemical segment
The chemical segment’s profitability is expected to improve significantly on the back of volume growth and increased operational efficiencies. The brokerage highlighted the company’s increasing chlorine integration to 70% by FY28, up from 64% in FY26, which will reduce transportation costs and increase the utilisation of caustic plants.
Additionally, Grasim Industries aims to nearly double its renewable energy share to 45% by the end of FY27, structurally lowering power costs. The ramp-up of the 50ktpa Epoxy Chlorohydrin (ECH) unit is another critical milestone.
The captive production of this feedstock will replace expensive imports and improve the cost competitiveness of the speciality chemicals division. These integration efforts are designed to stabilise margins even when global caustic soda prices remain range-bound.
Birla Opus paint business scaling
In the paint sector, Grasim’s “Birla Opus” has transitioned from an intensive expansion phase to a focus on revenue scale and earnings improvement. With all six greenfield plants now operational, the company holds a 24% share of industry capacity, making it the second-largest player in India by capacity.
Despite a broader industry slowdown, Birla Opus has gained substantial momentum, with revenue growth rates in Q3 FY26 being almost three times the industry average. The brand has established a massive distribution footprint across 11,500+ towns and enrolled over 50,000 dealers. Management has reiterated its target of reaching Rs 10,000 crore in revenue and achieving an operating breakeven by FY28, supported by recent price hikes that narrow the gap with established competitors.
Rapid scale-up and potential of Birla pivot (B2B E-commerce)
The B2B e-commerce platform, Birla Pivot, is demonstrating exceptional scale-up potential, with FY26 revenue reaching almost Rs 7,900 crore.
Motilal Oswal said that the platform’s revenue more than doubled year-over-year, significantly exceeding management’s earlier annual guidance. This growth is attributed to broad-based customer acquisition and deeper engagement, supported by a network of 5,000+ physical retail stores serving over 400 cities.
The platform now offers a vast catalogue of over 50,000 SKUs from 1,000+ Indian and international brands. While the business currently incurs operating losses due to initial heavy investments, it is projected to reach breakeven in the second half of FY27 as it continues to leverage its digital scale and order frequency.
Strong financial outlook
Financially, Grasim’s total EBITDA is expected to grow at a 38% CAGR over FY26-28, driven by loss reduction in new businesses and margin gains in core segments.
While net debt is expected to peak in FY27 due to capital expenditures, the brokerage house expects healthy operating and free cash flows in FY27 and FY28. Additionally, a sharp increase in net profit is expected in FY27, largely led by higher dividend income from its subsidiary, UltraTech Cement.
Grasim Industries share price performance
The share price of Grasim Industries has risen 1% in the last five trading days. The stock has surged 5% in the past one month and 15% in the last six months. Grasim Industries’ share price has increased 16% over the past 12 months.