Carborundum Universal (CU IN) – Q2FY26 Result Update – Soft quarter amid VAW impact; guidance intact – HOLD
Published on 31 Oct 2025
Carborundum Universal (CU) reported a moderate 6.0% YoY growth in consolidated revenue, while EBITDA margin contracted by 388bps YoY to 12.0%. In the Abrasives segment, logistics disruptions at Rhodius have been resolved, and festive-driven demand helped clear dealer inventories, supporting stronger volume prospects for H2FY26. The Ceramics segment continues to be driven by Metalized Cylinders and Engineered Ceramics, with management focusing on diversification into high-growth industries such as semiconductors, data centers, defence, and aerospace through new product development. Meanwhile, the Electrominerals segment remains under pressure due to an expected ~25% volume decline at VAW amid ongoing sanctions, partially offset by robust performance at Foskor Zirconia. Considering near-term headwinds, management has maintained its FY26 consolidated revenue growth guidance at 5.5–6.5% YoY, with an expected EBIT margin contraction of 250–300 bps. We roll forward to Sep’27E and maintain ‘Hold’ rating with a SoTP-based revised TP of Rs894 (Rs835 earlier) valuing Abrasives/Ceramics/Electrominerals at 30x/35x/15x Sep’27E (30x/35x/15x Mar’27E earlier).
