Grasim Industries shares jump 5% as Morgan Stanley upgrades stock, sees 34% upside potential

Grasim Industries, a key player in the cement sector, saw its shares rally nearly 5 percent on June 10 after global brokerage Morgan Stanley upgraded the stock rating to ‘Overweight’ from ‘Equal-weight’ and raised its target price to ₹3,500 from the earlier ₹2,975. The revised target implies an upside of over 34 percent from current levels. The Aditya Birla Group company was also named a “top pick in coverage” by the brokerage, with analysts bullish on both its core and emerging businesses.

Morgan Stanley’s optimism stemmed from Grasim’s better-than-expected launch of its paints business, which the brokerage believes is now poised for its “next leg of value unlocking.” The firm said, “The paints business has fared better than expected since launch,” adding that “multiple opportunities are in play” for Grasim’s continued outperformance.

While the new paints segment has drawn attention, Morgan Stanley emphasized that UltraTech Cement (UTCEM) continues to be the primary value driver for Grasim. “UltraTech remains the largest value contributor. Grasim should benefit from a multi-year earnings compounding story at UTCEM,” the brokerage noted.

The report further stated that Grasim’s diversification into new-age businesses is progressing well and contributing meaningfully to its overall valuation. “These businesses are scaling up fast, driving earnings and value optionality,” Morgan Stanley said, while also hinting at a potential re-rating. It noted that the ‘Holdco discount’ could narrow as the paints business gains traction and begins to materially contribute to earnings.

Robust Q4FY25 performance 

Grasim’s strong fundamentals supported Morgan Stanley’s upgrade. The company reported a 9 percent year-on-year rise in consolidated net profit at ₹1,496 crore for the quarter ended March 2025, compared to ₹1,370 crore in the same period last year.

The consolidated revenue from operations jumped 17 percent YoY to ₹44,267 crore, up from ₹37,727 crore in Q4FY24. Sequentially, revenue surged by 25 percent from ₹35,378 crore in Q3FY25, while profit after tax (PAT) grew 82 percent from ₹820 crore in the December quarter.

Grasim also posted its highest-ever quarterly revenue, while EBITDA increased 6 percent year-on-year to ₹6,548 crore. Encouraged by its strong performance, Grasim Industries’ board proposed a final dividend of ₹10 per equity share for the financial year ending March 31, 2025.

Stock price trend

Following the upgrade, Grasim’s share price rose as much as 4.8 percent to hit an intraday high of ₹2,735 on June 10. The stock now trades just 5 percent shy of its 52-week high of ₹2,875.45, reached in July 2024. It has also recovered 20 percent from its 52-week low of ₹2,276.10, touched in January 2025.

In the past 12 months, Grasim’s stock has gained about 10 percent. After a 7 percent decline in May, the stock has already gained 6.5 percent in June, continuing its upward momentum. It had also risen 5 percent in April and 13 percent in March. Prior to that, the stock dipped 8 percent in February but logged a modest 2.7 percent gain in January.

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