Riding high on better growth prospects…
Grasim Industries Ltd, flagship company of Aditya Birla Group is a diversified company with interests in cement, textiles, retail and chemicals.
Valuations & View:
Given its leadership position globally, better product mix (higher proportion of Speciality fibre) coupled with firm VSF demand, we expect consolidated revenue/PAT to grow at a CAGR of 10%/22% over FY17-19E. Further, steady ramp up in capacities at Ultratech and uptick in demand from housing and infrastructure bodes well for the cement business. We value Grasim based on SOTP, valuing standalone business at 5.5x EV/EBITDA, 60% holding in Ultratech at our TP and stake in others post 40% discount at CMP. Recommend BUY with a TP of Rs1,222.
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