Grindwell Norton Q3 Results Review - Decent But Abrasives, Ceramics Disappoint: Prabhudas Lilladher

Prabhudas Lilladher Report

We revise our FY24/25/26E earning per share estimates of Grindwell Norton Ltd. by -8.4%/-8.5%/-7.6% factoring in likely continued pressure on price and volumes from Chinese dumping and downgrade the rating to ‘Accumulate’ from Buy with a revised target price of Rs 2,512 (Rs 2,604 earlier).

Grindwell Norton reported revenue growth of 9.3% YoY with Ebitda margin dipping 34 bps YoY to 19.4%.

During 9M FY24, Abrasives revenue rose marginally by 3.9% YoY to Rs 9.9 billion with Ebit margin of 13.8% (versus 13.9% in 9M FY23). Ceramics and Plastics segment reported 6.3% YoY revenue growth in 9M FY24 to Rs 8.3 billion, while Ebit margin declined by 232 basis points YoY to 19.7%.

We expect margin improvement for this segment in the medium term, driven by higher volumes and better product mix. Digital Services has been the best performing segment for Grindwell Norton in 9M FY23, as revenue grew strongly by 27.0% YoY to Rs 1.4 billion with Ebit margin rising sharply to 33.9% (versus 18.4% in 9M FY23).

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