Hold Carborundum; target of Rs 325: Sushil Finance

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Hold Carborundum; target of Rs 325: Sushil Finance

Sushil Finance has recommended hold rating on Carborundum Universal with a target of Rs 325, in its August 17, 2011 research report.

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Sushil Finance has recommended hold rating on Carborundum Universal with a target of Rs 325, in its August 17, 2011 research report.

"Carborundum Universal, for the quarter ended 30th June, 2011 (Q1FY12), on a consolidated basis, CUMI posted net sales of Rs. 4780 mn, registering a growth of 32.8% YoY. It's EBITDA increased by 65.3% YoY to Rs.995 mn and EBITDA margins increased by 409 bps to 20.8%. Its PBT (including other income) increased by 74.3% YoY and APAT increased by 161.6% YoY to Rs. 523 mn. Its EPS for the quarter is Rs.5.6. • Growth was driven by the strong performance of both the Indian & the overseas operations. All business segments recorded growth rate in excess of 25%. Overseas subsidiaries recorded strong growth in sales, particularly the entities in Russia & South Africa."

"The Indian abrasives industry has been highly concentrated, but many global players have entered the Indian market due to slowdown in Europe & the US. CUMI continues to maintain leadership position (35% market share) despite heavy competition in the changing domestic market scenario. We believe that CUMI is well-placed to capitalize on the growth opportunities domestically, as the demand continues to be robust. Internationally also, its subsidiaries should perform well, as the demand begins to recover in Europe, US & Russia. Going forward, we expect its Consolidated Revenues to grow by 14.7% & 19.7% in FY12 & FY13, while it's APAT to grow by 14.1% & 20.3% in FY12 & FY13 respectively. Given the recent rise in the stock price, we change our rating on the stock to "HOLD" with a target price of Rs 325 (15x FY13E EPS of Rs.21.6)," says Sushil Finance research report.

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To read the full report click on the attachment