GRASIM - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 3.2

📊 Core Financials Breakdown

Profitability

ROE: 0.35% and ROCE: 1.52% — extremely weak, especially for a ₹1.96 lakh Cr company.

EPS: ₹2.42 — very low, with recent quarterly losses of ₹118 Cr (vs ₹174 Cr prior), indicating ongoing pressure.

Qtr Profit Var: -127% — sharp decline, suggesting operational or one-off challenges.

Balance Sheet & Leverage

Debt-to-Equity: 0.22 — low leverage, a positive for long-term stability.

Book Value: ₹799 — implies a P/B ratio of ~3.6, which is high given the weak returns.

Dividend Yield: 0.35% — modest, not a major draw for income investors.

💰 Valuation Metrics

Metric Value Comment

P/E Ratio 663 Extremely inflated — not meaningful due to negative earnings

PEG Ratio -11.0 Negative PEG flags unreliable or declining growth

Intrinsic Value ~₹2,600–₹2,700 CMP slightly above fair value zone

Valuation is disconnected from fundamentals, likely driven by holding company premium or future growth expectations.

🏢 Business Model & Competitive Edge

Sector: Diversified — cement, viscose, chemicals, textiles, and financial services.

Strengths

Part of Aditya Birla Group — strong legacy and diversified exposure.

Upcoming foray into paints segment with ₹10,000 Cr investment, expected to disrupt incumbents.

FII holding up (+0.34%) — cautious optimism from foreign investors.

Challenges

DII holding down (-0.33%) — domestic institutions remain skeptical.

Weak profitability and high valuation multiples.

Recent losses and negative PEG suggest earnings volatility.

📉 Technicals & Entry Zone

Current Price: ₹2,881

DMA 50: ₹2,784 | DMA 200: ₹2,668 — bullish trend intact

RSI: 65.4 — nearing overbought zone

MACD: Positive — momentum strong

📌 Suggested Entry Zone: ₹2,600–₹2,700

A dip near the 200 DMA would offer a better margin of safety, especially if earnings stabilize.

🧭 Long-Term Holding Guidance

Hold with caution: If already invested, monitor profitability and execution in the paints business.

Avoid fresh entry at CMP: Wait for valuation to cool or for earnings to justify the premium.

Brokerages like Morgan Stanley and Motilal Oswal have set target prices around ₹3,420, citing long-term value unlocking

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. Let me know if you'd like a sum-of-the-parts valuation or comparison with UltraTech and Aditya Birla Capital.

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The Economic Times

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The Economic Times

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stockanalysis.com

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