Grasim Industries Announces A Bold Entry Into Paints: Motilal Oswal
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Motilal Oswal Report
We view Grasim Industries Ltd.’s announced foray into the Indian decorative paints industry as a bold step.
While it would be challenging to gain market share in an oligopolistic industry, if it can execute well, supported by the existing brand strength and distribution network of Ultratech’s white cement and putty businesses, the company could significantly improve its return on capital employed profile (currently only approximately 5-6%).
While the company is still formalizing the blueprint for this venture, planned capex of Rs 50 billion over the next three years would make it the second largest company in the sector in terms of capital employed (after Asian Paints Ltd.).
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