Grindwell Norton (GWN IN) – Q2FY27 Result Update – Healthy Q2; C&P led growth momentum intact – ACCUMULATE

We revise our EPS estimates by +1.9%/+1.5% for FY28E/FY29E factoring in continued healthy growth momentum in the Ceramics and Plastics (C&P) division. GWN reported a healthy Q2FY27, with revenue growing 14.1% YoY and EBITDA margin expanding 68bps YoY to 18.8% driven by operating leverage, partially offset by lower gross margin due to higher material costs. Growth was led by the Ceramics & Plastics segment (+18.5% YoY), where EBIT margin expanded 178bps YoY, likely supported by a favourable mix of specialty, value-added products and traction across engineered ceramics, performance polymers and tape solutions. The Abrasives business also maintained healthy momentum (+15.1% YoY), with EBIT margin at 13.3%, likely benefiting from new product launches, digital initiatives, customer engagement and improved competitiveness against low-cost Chinese imports following the withdrawal of export rebates. The Digital Services segment grew 9.7% YoY, although EBIT margin contracted 269bps YoY to 23.1%. Further, continued development of application-specific products for high-growth end markets such as semiconductors, electric vehicles, aerospace, solar and biopharma is strengthening GWN’s solutions-led positioning. The ramp-up of recently commissioned capacities, further product development and localisation, and gradual scaling of exports to Europe and North America following customer qualifications are expected to support medium-term growth. However, input cost volatility and sustained competition from low-cost Chinese imports in select abrasive categories remain key monitorables. The stock is trading at a P/E of 37.3x/32.7x on FY28/29E earnings. We roll forward to Sep’28E and maintain our ‘Accumulate’ rating, valuing the stock at 40x Sep’28E (41x Mar28’E earlier) arriving at a TP of INR2,245 (INR2,113 earlier).