Carborundum Universal Quarterly Result Update Q4FY22
19-05-2022

Carborundum Universal | Market Cap : Rs. 13,470 Cr

CMP 718 | P/E 33x FY23

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

Key highlights:

Segment Performance:
- Abrasivessegment grew 15% YoY. Segment sales for FY22 at a consolidated level grew by 29%
- Ceramicsgrew 6% YoY. Segment sales for FY22 at a consolidated level grew by 27%
- Electromineralsgrew 17% YoY. Segment sales for FY22 at a consolidated level grew by 23%
- Moderation of growth seen in Abrasives and Ceramics vs previous quarter. Electrominerals resilient due to strong demand.
Current utilisations stand at 65% for abrasives, 80% for ceramics and 95% at Electrominerals.
Acquisitions:Volzhsky Abrasives Works (VAW), Russia registered double digit growth in Rouble terms. This year had been a turnaround year for Foskor Zirconia (Pty) Limited, South Africa which registered double-digit growth.
Abrasives segment had one-time provisioning of Rs 32 cr on account of legal dispute with Kerala State Electricity Board (KSEB).
Free cash flow was lower at 35% of PAT on account for higher inventories and higher capex.
The capital expenditure incurred during the year 2021-22 was Rs.170 Crores at consolidated level.
The Board of Directors of the Company has recommended a final dividend of Rs.2.00/- per share (Rs. 1.5/share in Q3). Total dividend of Rs.3.50 per share

Russia-Ukraine Impact:Its Russian subsidiary VAW is not under any sanction. Further, Silicon carbide, which is its primary product, is not under any sanction. VAW has been operating at optimum capacity and domestics sales and exports to India have not been impacted so far. VAW does not have exposure to Ukraine

Management Outlook: As per management, acquisitions of Rhodius and Awuko would provide entry into new products, raw material distribution reach in Europe. The acquisitions would provide entry into resin bonded thin wheels which are specialised high margin products. Rhodius has a robust order book and considerable order pipeline. The company has strong financial track record. The company envisages strong infrastructure led growth both in India, the US and other key geographies. Demand remains strong across product segments although maintaining margins is a challenge.