ICICI Securities research report on Carborundum Universal
Carborundum Universal (CUMI) reported consolidated revenue / EBITDA / PAT growth of 6% / 33% / 44% YoY at INR 12bn / 1.7bn / 1.1bn for Q1FY24. Increased supply from China in the domestic market and weakness in select overseas markets resulted in muted revenue growth. However, EBITDA margin expanded by 290bps YoY mainly on account of increased profitability in abrasives and ceramics. We believe the abrasives business will continue to grow on the back of industrial recovery – mainly in auto, agro processing, housing demand in tier-2&3 cities, and SME industrial clusters.
Outlook
However, nearterm headwinds – such as weakness in Europe and increased dumping from China – could restrict volume growth. We downgrade our rating to HOLD and lower the TP to INR 1,300, implying 35x FY25E EPS (earlier: INR 1,318).
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