Accumulate Grindwell Norton; target of Rs 1890: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on Grindwell Norton with a target price of Rs 1890 in its research report dated February 14, 2025.

Broker Research

February 14, 2025 / 12:45 IST

Accumulate

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Grindwell Norton

Grindwell Norton (GWN) reported a muted quarter with revenue growing by 6.5% YoY and EBITDA margin declining by 180bps to 17.6%. During 9MFY25, Abrasives segment revenue grew by 5.1% YoY to Rs10.4bn while EBIT margin dipped to 12.8% (vs 13.8% in 9MFY25). Growth in abrasives will be driven by demand for high-productivity solutions in steel and construction, opportunities in solar glass edge grinding, and the expansion of non-woven products into new market segments. Ceramics & Plastics revenue came in at Rs9.0bn for 9MFY25, up 8.6% YoY; however, segment margin declined by 295bps to 16.7% (vs 19.7% in 9MFY25). We expect margins to improve in this segment driven by better product mix and higher volume with recovery in export demand. Digital Services segment revenue came in at Rs1.4bn for 9MFY25, down 5.4% YoY with margin declining by 633bps to 27.6%. The stock is trading at a P/E of 41.9x/35.4x on FY26/27E earnings. We value it at a P/E of 44x (55x earlier) and rolling it forward to Sep’26E revenue (FY26E earlier). Downgrade to ‘Accumulate’

Outlook

We revise our FY26/27E EPS estimates by -13.6%/-14.8% factoring in possibility of intense Chinese dumping impacting revenue, and slower exports. We downgrade the rating to ‘Accumulate’ from ‘Buy’, with a revised TP of Rs1,890 (Rs Rs2,511 earlier).

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