Grasim Industries Surges To Record High On Plans To Enter Paint Business

Paints business has registered revenue CAGR of around 11% during FY14 to FY19.

Shares of Aditya Birla Group Company, Grasim Industries, rose as much as 6 per cent to hit record high of Rs 1,065 on the National Stock Exchange after the company informed exchanges that it plans to enter paints business. The company plans to manufacture, sell, trade, import and export and otherwise deal in all types of paints and allied products and services as it believes this sector is likely to be value accretive to its stakeholders.

Grasim Industries board has approved plan to invest Rs 5,000 crore over next three years in the paints business.

Kumar Mangalam Birla, Chairman, Aditya Birla Group said: “The foray into paints is a strategic portfolio choice for Grasim as it looks to identify new growth engines. Grasim’s strong balance sheet will facilitate this entry, which will add size, scale and diversity to its existing portfolio of established standalone businesses. The Company endeavors to invest in businesses that have the potential to be a leader in their addressable markets; have the ability to achieve scale, and generate consistent and attractive returns in the long term. The paints industry presents a high-growth option for Grasim.”

The sector has registered revenue CAGR of around 11% during FY14 to FY19, and given the value migration from the unorganized to the organized market, the outlook remains robust, providing the space for a quality new player. The entry of Grasim in the paints sector will offer a wide choice to Indian consumers as the Company plans to introduce the latest range of paint products in line with global mega-trends, Grasim Industries said in a press release.

As of 11:02 am, Grasim Industries shares traded 5.64 per cent higher at Rs 1,061, outperforming the Sensex which was trading on a flat note.