Carborundum Universal delivered strong financial results for Q1, with net profit rising 23.4% to ₹76.4 crore compared to ₹61.89 crore in the previous year. According to latest reports from Business Standard, the company's revenue increased 16.9% to ₹1,410.57 crore from ₹1,206.65 crore in the corresponding quarter last fiscal. The company's EBITDA grew 11.4% to ₹135.1 crore from ₹121.3 crore in Q1 of the previous year, demonstrating solid operational performance across most parameters. Prabhudas Lilladher has now upgraded its rating from 'Reduce' to 'Hold' with a revised target price of ₹1,072, citing healthy outlook in the Ceramics division.
Despite strong revenue and profit growth, the company faced margin compression during the quarter. As reported by Business Standard, EBITDA margin contracted to 9.5% from 10.05% in the year-ago period, indicating pressure on operational efficiency. According to Prabhudas Lilladher's latest report, EBITDA margin contracted by 48bps YoY, with Abrasives profitability remaining under pressure from approximately ₹160 million of cost push, primarily due to higher oil-linked inputs and fuel costs. However, management retained its 9.5-10% margin guidance excluding Awuko losses.
The Abrasives business segment showed robust performance with consolidated sales of ₹610 crore, representing 20.1% growth from the same quarter last year. According to Business Standard, the segment's profit before finance cost and tax (PBIT) stood at ₹40 crore, significantly higher than ₹11 crore recorded in the previous year. The Electro Minerals segment also performed well with revenue of ₹473 crore, increasing 16.8% from the year-ago period, while PBIT for the segment reached ₹22 crore compared to ₹4 crore earlier. The Ceramics segment witnessed healthy traction across engineered ceramics, metallized cylinders and SOFC ceramics, prompting management to raise FY27 growth guidance to 23-25% from the earlier 15-15.5%.
Management continues to pursue closure of Awuko and a strategic resolution for Foskor Zirconia, with both processes expected to progress over the next quarter. As reported by Prabhudas Lilladher, management retained its FY27 capex guidance at ₹4 billion, focused on advanced ceramics, power electronics, substrates, metallized tubes/rings, thermal spray powders and zirconia furnace grain. The company expects ~15% YoY revenue growth excluding Awuko and Foskor, with improving ceramics, exports and advanced-application opportunities supporting medium-term growth. Semiconductor wafer-fab equipment and aerospace & defence applications are expected to scale meaningfully from FY28.
Following the earnings announcement, Carborundum Universal shares experienced initial volatility but recovered from intraday lows. As reported by CNBC TV18, the stock gave up gains after results announcement but recovered from the day's low, trading 2% higher at ₹1,091.5. The stock has risen 27% so far this year, reflecting positive investor sentiment despite margin pressures in the quarter. Prabhudas Lilladher values the stock at a P/E of 49.9x/40.8x on FY27/28E earnings, with the revised target price of ₹1,072 based on SoTP valuation of Abrasives/Ceramics/Electrominerals at 35x/41x/15x Mar'28E respectively.
