Grasim Industries Achieves 52-Week High as Fundraising Plans Emerge

Grasim Industries Achieves 52-Week High as Fundraising Plans Emerge
Grasim Industries Achieves 52-Week High as Fundraising Plans Emerge
Grasim Industries Achieves 52-Week High as Fundraising Plans Emerge
Grasim Industries Achieves 52-Week High as Fundraising Plans Emerge

Grasim Industries Achieves 52-Week High as Fundraising Plans Emerge

Grasim Industries Achieves 52-Week High as Fundraising Plans Emerge

Grasim Industries Achieves 52-Week High as Fundraising Plans Emerge

Grasim Industries witnessed a surge in its share price, reaching a fresh 52-week high of ₹2,021.95 in early trading on BSE. This increase followed the company’s announcement that its board of directors will convene on October 16, 2023, to consider fundraising options.

Board Meeting to Discuss Fundraising Options

Grasim Industries revealed that the board meeting scheduled for October 16 will focus on raising funds through various means, including equity shares or other securities via a rights issue, qualified institutions placement (QIP), preferential issue, or any other method permitted under applicable law, subject to the necessary regulatory and statutory approvals.

Grasim’s share price has experienced notable gains in recent months. It reached its 52-week low of ₹1,528 on March 16, 2023, and has appreciated by nearly 30% in approximately seven months. The stock opened at ₹1,994.95 in the morning and rose 2.14% to achieve its 52-week high.

Positive Valuation and Growth Potential

The stock is currently trading at a price-to-earnings (PE) ratio of around 20, well below its average PE of about 25. Additionally, its price-to-book value (PB) ratio stands at 1.6, lower than the median PB of about 2, indicating potential room for growth.

The upcoming Q2FY24 earnings report is expected to be a significant factor affecting the stock’s trajectory. Projections suggest that revenues from the VSF (viscose staple fibre) and Chemical segments may experience a YoY decrease of 3% and 16%, respectively. The standalone operating profit margin (OPM) is expected to contract by 4.3pp YoY to 9.8%. Despite an estimated 37% YoY decline in adjusted profit to ₹650 crore, it is anticipated that adjusted profit may increase by 83% QoQ due to dividend income from UltraTech Cement. The VSF segment’s EBITDA is expected to increase by 19% YoY, while the OPM is likely to improve by 1.9pp YoY to 10.2%. Conversely, the chemical segment’s EBITDA is projected to decrease by 43% YoY, with the OPM contracting by 7.3pp YoY to 15.2%.

Technical Indicators Point to Upside Potential

Technical analysts have also expressed optimism about the stock’s short-term performance. Key technical indicators suggest the possibility of an upward trend. The stock has been on an uptrend for the last four to five months, with monthly-scale DMIs positioned for further upward movement, and the monthly RSI nearing the 70 zone. All significant exponential moving averages (21–50–100–200 days) are pointing upward, supporting the stock’s price action.

Analysts recommend buying the stock, with target prices ranging from ₹2,100 to ₹2,300. The suggested buy range lies between ₹1,975 and ₹2,025, with stop-loss levels set at ₹1,850 on a daily closing basis. The investment horizon for this recommendation is three to four months, indicating short to medium-term potential.

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