Shares of Grasim Industries Ltd (GRAS.NS) plunged as much as 6.5% on Thursday—marking the steepest intraday decline in more than three years—after the sudden exit of the CEO of its newly launched paints division triggered concerns about long-term growth.

Leadership Change Drives Stock Selloff

Rakshit Hargave, who served as CEO of Grasim’s paints arm, Birla Opus, for four years, announced he will be leaving to join food major Britannia Industries (BRIT.NS) as its chief executive. His departure comes less than a year after Grasim launched its ambitious Rs 100 billion entry into India’s competitive paints sector.

Grasim shares were trading 6% lower by afternoon, though the stock still holds an 11% year-to-date gain, outperforming the Nifty 50 Index (.NSEI), which has risen 8% in the same period.

Brokerages Flag Investor Uncertainty

• Motilal Oswal flagged the leadership change as a key “overhang” in the near term.
• Jefferies labeled the move a “negative surprise,” likely to dampen investor sentiment.

Analysts warn that the successor’s ability to sustain Birla Opus’ growth trajectory will be under scrutiny, especially after Grasim confirmed 97.3% of its Rs 100 billion capex for the unit has been deployed.

“There’s concern whether the new leadership can maintain momentum, especially with most investments already made,” said Antu Thomas, senior research analyst at Geojit Financial Services.

Grasim reported its Q2 earnings on Wednesday, and said group veteran Himanshu Kapania will oversee the paints business until a new CEO is appointed.

Competitive Advantage Erodes for Rivals

Hargave’s exit is being seen as a temporary reprieve for industry leader Asian Paints (ASPN.NS) and challenger Berger Paints (BRGR.NS). Since Grasim entered the paints industry in 2024, Asian Paints stock is down 18%, while Grasim is up 31% as of the last close.

On Thursday, Asian Paints’ shares surged 5% after being granted a higher weight on the MSCI Global Standard Index as part of the November 24 quarterly review.