Carborundum Universal Q3FY22: China+1 and acquisition led synergies
15-02-2022

Carborundum Universal |  Market Cap : Rs. 16,307 Cr

CMP 840 | 35x FY23 PE

 

Results: Carborundum Universal reported ~23% growth in sales year on year and ~21% growth in operating profit.

Click here for 10 Year X-ray

 

Key highlights: 

  • Abrasives segment grew by 13%, Ceramic by 33% and Electrominerals by 24% year on year. Current utilisations stand at 65% for abrasives, 80% for ceramics and 95% at Electrominerals.
  • Abrasives sales growth was led by a sharp uptick across the standalone business, Sterling Abrasives and Russian subsidiary. The operating profit of the segment dipped  6% year on year owing to raw material inflation.
  • Ceramics operating profit grew well at 25% YoY
  • Electrominerals saw a stellar operating profit growth of 110% YoY..
  • The company acquired all main assets of AbrasivesWandmacher GmbH & Co. KG (AWUKO). AWUKO is a 120- year-old leading brand in Coated Abrasives business and is a market leader in Leather and Wood applications. The acquisition is in line with CUMI’s expansion plans in Europe
  • Company also entered into a Share Purchase agreement to acquire Rhodius Abrasives
  • The Board of Directors of the Company at its meeting held on Feb 10, 2022 have declared an interim dividend of Rs.1.50/- per share

 

Management Outlook: The management remains confident of clocking strong sales over 4–5 years with: (i) the Electro-minerals division (EMD) benefitting strongly from supply chain constraints in China (ii) Strong abrasives demand led by lower Chinese imports and (iii) ceramics seeing growth from newer applications like hydrogen fuel cells, EVs etc. Management expects demand visibility, ability to pass on cost increases and acquisition led synergies to be key drivers for growth across segments

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