Buy Carborundum Universal; target of Rs 303: Anand Rathi

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Anand Rathi 's research report on Carborundum Universal

The steep, 45% y/y, drop in Carborundum’s(standalone) sales reflects already weak industrial activity, further aggravated by the nation-wide lockdown. The better performance of international subsidiaries, though, led to consolidated sales falling less(-33% y/y),as we expected. The ~10%EBITDA margin wasaffected by lower volumes, an adverse product mix and a `75m forex loss. With gradually improving utilisation, management is confident of steady margin, supported by operating efficiency, cost controls, product launches in ceramics and cutting out the loss-suffering Foskor Zirconia this year.

Outlook

We maintain a Buy, with an unchanged target price (`303, 22x FY22e).

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