Grindwell Norton (GWN IN) – Q1FY27 Result Update – Healthy Q1; C&P to anchor growth momentum – ACCUMULATE

We revise our EPS estimates by +3.9%/+3.0% for FY27E/FY28E factoring in continued healthy growth momentum in the Ceramics and Plastics (C&P) division. GWN reported a healthy Q1FY27 with revenue growth of 14.2% YoY and EBITDA margin expansion of 108bps YoY to 19.5%, likely supported by a favorable product mix, operating leverage and the ramp-up of capacities. Growth was led by the Ceramics & Plastics segment (+18.8% YoY), where a richer mix of specialty and value-added products likely supported a 377bps expansion in EBIT margin. The Abrasives business also maintained healthy momentum (+10.0% YoY), likely benefiting from product innovation, market share gains and improved competitiveness due to elevated landed costs of Chinese imports, while sustaining an EBIT margin of 12.7%. GWN continues to strengthen its solutions-led business through sustained investments across Abrasives, Ceramics and Performance Polymer Solutions, backed by capacity expansion and a differentiated product portfolio focused on high-growth end markets. These investments, coupled with improving utilization of recently commissioned capacities, continued new product development and a gradual recovery in exports to Europe and North America, are expected to support growth over the medium term. However, input cost volatility arising from geopolitical uncertainties and Chinese competition in select abrasive categories remain key monitorables. The stock is trading at a P/E of 44.8x/39.2x on FY27/28E earnings. We maintain our ‘Accumulate’ rating valuing the stock at a PE of 41x Mar’28E (40x Mar’28E earlier) arriving at a TP of INR2,113 (INR2,002 earlier).