Prabhudas Lilladher's research report on Carborundum Universal
Carborundum Universal (CU) reported decent quarterly performance with flattish revenue YoY and EBITDA margin improving by 157bs YoY to 17.4%. Continued traction in Indian market is expected to aid growth across segments. CUMI America should continue to perform well, while healthy improvement is anticipated in AWUKO, RHODIUS, and Foskor Zirconia. Chinese dumping will likely keep Electrominerals margin and retail abrasive sales under pressure. Management has guided for Rs51-52bn consol revenue in FY25 led by Ceramics & Abrasives, with 20-30bps improvement in PBIT margin.
Outlook
We revise our FY25/26E EPS estimates by +2.1%/2.7% factoring in improving performance at subsidiary level and upcoming capacity expansions, but downgrade the rating to ‘Accumulate’ from Buy with a revised TP of Rs1,631 (Rs1,347 earlier) given the steep run-up in stock price.
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