Hold Carborundum Universal; target of Rs 835: Prabhudas Lilladher

Prabhudas Lilladher recommended hold rating on Carborundum Universal with a target price of Rs 835 in its research report dated August 08, 2025.

Broker Research

August 12, 2025 / 12:41 IST

Hold

26 Aug, 2025 12:21

Volume

Todays L/H

Prabhudas Lilladher's research report on Carborundum Universal

We revise our FY26/27E EPS estimates by -16.3%/-5.4% accounting for continued weakness in Abrasives on account of Chinese dumping and nearterm headwinds in Rhodius. Carborundum Universal (CU) reported a modest 1.9% YoY increase in consolidated sales, while EBITDA margin contracted by 622 bps YoY to 9.9%, weighed down by weaker subsidiary profitability. In the Abrasives segment, logistics-related disruptions at Rhodius and softer demand across distribution channels due to inventory correction, impacted performance. Conversely, the Ceramics segment benefited from improved volumes and pricing in Industrial and Metallized ceramics. Standalone Electrominerals witnessed healthy demand from both domestic and export markets; however, consolidated profitability remained under pressure due to sanctions on VAW, leading to a ~25% volume decline. Given the prevailing near-term headwinds, management has downward revised its FY26 consolidated revenue growth guidance to 5.5–6.5% YoY.

Outlook

We maintain ‘Hold’ rating with a SoTP-based revised TP of Rs835 (Rs1,028 earlier) valuing Abrasives/Ceramics/Electrominerals at 30x/35x/15x Mar’27E (32x/40x/20x Mar’27E earlier).

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