The brokerage also named the Aditya Birla Group company a “top pick in coverage”, citing “multiple opportunities in play” and better-than-expected performance in its newly launched paints business.
The target price of Rs 3,500 implies a potential upside of 28.5% from the stock’s intraday high on Tuesday.
“The paints business has fared better than expected since launch,” Morgan Stanley said, adding that it expects “the next leg of paints value unlocking in play” to drive further upside.
UltraTech and new-age bets in focus
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While the paints segment has had a promising start, the brokerage highlighted that “UltraTech remains the largest value driver for Grasim,” adding that the company “should benefit from a multi-year earnings compounding story at UTCEM.”
Morgan Stanley also noted that Grasim’s diversification strategy is paying off. “New-age businesses are scaling up fast, driving earnings and value optionality,” the brokerage said, adding that “Holdco discounts could moderate further as the paints business scales up.”
Technicals signal strength
Grasim shares have gained 12.4% over the past year and are up 11% in the last three months. In the past week alone, the stock has surged 6%, supported by bullish signals from key technical indicators.
The stock is currently trading above five of its eight key simple moving averages (SMAs) — including the 5-day, 10-day, 100-day, 150-day, and 200-day — indicating a positive trend across both short- and long-term charts. The Relative Strength Index (RSI) stands at 47.3, suggesting the stock is neither overbought nor oversold.
However, the Moving Average Convergence Divergence (MACD) is at -32.2, below both its signal and center lines — a technically bearish signal that may indicate some caution among traders.
Strong Q4 earnings
The upgrade follows strong March-quarter earnings. In May, Grasim reported a consolidated net profit of Rs 1,496 crore for Q4FY25, up 9% from Rs 1,370 crore in the same period last year. Revenue from operations rose 17% year-on-year to Rs 44,267 crore from Rs 37,727 crore.
The company also recommended a dividend of Rs 10 per equity share for the financial year ended March 31, 2025.
Also read | Grasim Industries Q4 Results: Cons PAT rises 9% YoY to Rs 1,496 crore. Rs 10 per share dividend announced
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
