Buy Carborundum Universal; target of Rs 340: HDFC Securities

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HDFC Securities' research report on Carborundum Universal

As per the management, Silicon Carbide (SiC) prices have increased offsetting the cost inflation witnessed in FY17. Additionally, the EM segment would benefit from revenues from the newly-commissioned plants (Foskor and Thukela). The same is expected to aid revenue growth and improve capital efficiency, thereby return ratios.

Outlook

Improving auto volumes and the push for ‘Make in India’ augurs well for growth in the Abrasive segment. Despite a soft 4QFY17, we see long-term drivers to be in place for CUMI. Reiterate BUY with a TP of Rs 340/share (25x FY19E EPS).

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