Grasim set to launch its paints business today — here's what the Street makes of it

The Aditya Birla Group company will launch its paint product and inaugurate the highly anticipated first paint plant in Panipat this month. It will also commission two other plants during the ongoing quarter and three more plants in the next 12-15 months.

Analysts at Jefferies are eagerly awaiting the plant opening this week, where they hope to gain deeper insights into the company's growth outlook, branding, distribution, and strategy of balancing margin expansion against market share gains in this extremely competitive business.

Brokerage Morgan Stanley also has an 'Overweight' call on the stock with a target price of ₹2,430. It is bullish on the Grasim Industries stock on the back of the company's paints business launch which is said to be on track and expansion of its B2B e-commerce business.

The consensus in the Street is that Grasim Industries will be faced with an uphill task. Smaller players will feel an impact, but Asian Paints is expected to remain unscathed.

Jefferies has retained its 'Underperform' call on the Asian Paints stock with a target price of ₹2,500 per share. The brokerage believes the counter has a perplexing valuation of 55 times one-year forward PE and has not risen much over the last two years.

Grasim's entry will add to the competition in the decorative paints business that is dominated by players such as Asian Paints and Berger, while some new players like JSW and Pidilite have also entered the paints and coatings industry that is estimated to grow into a ₹1 lakh crore market in the next few years.