Carborundum Uni.

Carborundum Universal Limited reported consolidated sales of INR1,207 crores for Q1 FY26, reflecting a modest 1.9% year-on-year growth and 0.6% quarter-on-quarter growth. Standalone sales demonstrated stronger growth, increasing by 5.2% year-on-year to INR698 crores. However, consolidated PAT saw a significant decline of 45.2% to INR62 crores, primarily impacted by challenges in its Rhodius and VAW operations. In contrast, standalone PAT surged by 55.4% to INR145 crores, largely due to a one-time^📎 dividend of INR68 crores from SEDCO.

The Abrasives segment experienced an 8% decline in consolidated sales to INR508 crores, with PBIT falling sharply to INR11 crores, resulting in a PBIT margin of 2.2%. This was mainly driven by a 23% sales decline in Rhodius and a 5.56% decline in standalone Abrasives. The Electrominerals segment recorded a 6.3% sales growth to INR405 crores, but PBIT dropped significantly to INR4 crores, leading to a margin of 1.1%, attributed to higher alumina costs and VAW sanctions. Conversely, the Ceramics segment showed robust performance, with sales growing 11.1% to INR300 crores and PBIT increasing 16% to INR75 crores, maintaining a healthy 25% PBIT margin.

Rhodius, the German subsidiary, faced severe operational disruption in Q1 FY26 due to a change in its logistics partner, leading to non-fulfilment of orders and a EUR1.6 million loss. Management expects operations to stabilize by August end, with sales for the remaining three quarters aligning with last year's, but the Q1 loss is irrecoverable, projecting a full-year loss of EUR2 million for Rhodius. VAW sales declined 25% to RUB1.84 billion, with PAT at RUB72 million, as sanctions continue to restrict sales to Russia, significantly impacting Electrominerals' profitability.

Capex investment for Q1 FY26 was INR64 crores, with a full-year plan of INR350 crores. Consolidated total debt increased to INR172 crores by quarter-end, up from INR120 crores in Q4 FY25, while standalone operations remained debt-free. The consolidated debt-to-equity ratio stood at 0.05. The company demonstrated strong free cash flow conversion, at 98% of PAT consolidated and 104% standalone, indicating a robust balance sheet and healthy liquidity position.

Management maintained its full-year sales growth guidance for Ceramics (16-18%) and Electrominerals (1-2%). However, Abrasives sales growth guidance was revised downwards from 5-6% to 4-5%, leading to an overall consolidated sales growth revision from 6-7% to 5.5-6.5%. PBIT margin guidance was also adjusted: Ceramics maintained at 23.5-23.7%, but EMD was cut from 6.5-7.5% to 4.5-5.5%, and Abrasives from 8-8.5% to 6-6.5%. Consequently, the overall consolidated PBIT margin drop from FY25 base was revised from 100-150 bps to 250-300 bps.

The company's long-term strategic programs, including those for Abrasives growth and new product development, are progressing as planned. The HP SIC pilot plant is on target, with samples seeded to clients for testing, although significant sales from this initiative are not anticipated in the current fiscal year or near-term. Additionally, the DRONCO asset purchase is expected to enable the manufacturing of INR80-100 million worth of wheels, contributing to future capacity and product offerings.