Motilal Oswal has reiterated its buy rating on Grasim Industries with a target price of ₹3,770, implying an upside of more than 18% from current levels. According to the brokerage's latest analysis, the recommendation is driven by the company's strong growth prospects across multiple business segments, including the high-growth Viscose Staple Fibre (VSF) segment, efficient chemical operations, scaling paint business, and the rapidly expanding B2B e-commerce platform Birla Pivot. The brokerage maintains its positive outlook based on the company's guidance of achieving US$1 billion in adjusted EBITDA by FY29.
The Viscose Staple Fibre (VSF) business remains a key growth driver for Grasim Industries, with globally VSF registering a 4% CAGR between CY15-25, while in India it grew by 9%, significantly outperforming stagnant cotton consumption. As reported by Motilal Oswal, VSF's share in the global fibre mix is rising to 7%, with the market projected to expand to 8.4 million tonnes by CY31. The company is aggressively expanding its Lyocell capacity to 210ktpa by FY30, which will make it one of the largest global producers. Strong pricing trends in China and backward integration into pulp and caustic soda help manage raw material volatility and enhance blended realisations.
The chemical segment's profitability is expected to improve significantly through 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 caustic plant utilisation. 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, with captive production replacing expensive imports and improving cost competitiveness of speciality chemicals.
The Birla Opus paint business has transitioned from expansion to revenue scale and earnings improvement, with all six greenfield plants now operational and the company holding a 24% share of industry capacity, making it the second-largest player in India by capacity. Despite 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 ₹10,000 crore in revenue and achieving operating breakeven by FY28, supported by recent price hikes that narrow the gap with established competitors.
The B2B e-commerce platform Birla Pivot is demonstrating exceptional scale-up potential, with FY26 revenue reaching almost ₹7,900 crore, more than doubling year-over-year and significantly exceeding management's earlier annual guidance. The platform now offers a vast catalogue of over 50,000 SKUs from 1,000+ Indian and international brands through a network of 5,000+ physical retail stores serving over 400 cities. 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.
Grasim Industries' 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 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. The positive brokerage outlook comes amid strong market performance, with Grasim Industries' share price rising 1% in the last five trading days, 5% in the past month, and 15% in the last six months, representing a 16% increase over the past 12 months.
