Carborundum Universal (CU IN) – Q3FY26 Result Update – Weak Q3 amid continued losses from subsidiaries – HOLD
Published on 30 Jan 2026
Carborundum Universal (CU) reported muted consolidated revenue growth of 2.5% YoY, with EBITDA margin contracting 159 bps YoY to 12.5%, driven by continued losses at subsidiaries. While standalone Abrasives performance remains healthy, margin pressure from subsidiaries has prompted management to revise Abrasives margin guidance to 4-4.5% from 6-6.5%. The Ceramics business faces headwinds from weak demand in wear ceramics and tariff-related project delays in the US, leading to cuts in FY26 growth and margin guidance. Standalone Electrominerals is benefiting from export traction, but losses at VAW and Foskor Zirconia continue to weigh on consolidated performance, with a potential divestment of Foskor Zirconia under consideration. Despite these challenges, the India-EU FTA is expected to offer some support to the European business. The stock is trading at a P/E of 36.3x/30.9x on FY27/28E earnings. We revise our FY27/28 EPS estimates by -5.2%/-3.7% factoring in continued weakness in subsidiaries. We maintain ‘Hold’ rating with a SoTP-based revised TP of Rs825 (Rs894 earlier) valuing Abrasives/Ceramics/Electrominerals at 30x/34x/15x Sep’27E (30x/35x/15x Sep’27E earlier).
