Carborundum Universal Q3 Results Review- Near-Term Pain Persists But Subsidiaries Improve: Prabhudas Lilladher

Prabhudas Lilladher Report

Carborundum Universal Ltd.'s revise our FY24/25/26E earning per share estimates by -7.8%/-5.9%/-6.2% factoring in impact of lower Russian Ruble to Indian rupee conversion and persistent competition and pricing pressure from Chinese dumping. The company reported mixed quarterly performance with consolidated revenue dipping 3.0% YoY, while Ebitda margin improved by 231 bs YoY to 16.7%.

Industrial and precision abrasives, aluminas, silicon carbide, and ceramics (excluding engineered) have seen healthy demand. Chinese dumping will continue to negatively impact realisations in electrominerals and retail abrasives for four-six more quarters. Volzhsky Abrasive Works was affected by RUB/INR rate normalising down to 0.9-0.92.

However, its volume growth and product mix was healthy. AWUKO and Rhodius turnarounds are on track. Management further revised its FY24 revenue guidance down to flattish consolidated growth (versus ~10% then ~5% guided earlier) and 5-6% standalone growth (versus~15% then 10-12% guided earlier).

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