Carborundum Universal Limited

Carborundum Universal reported consolidated sales of INR1,287 crores in Q2 FY26, reflecting a 6.4% year-over-year growth compared to INR1,209 crores in Q2 FY25, and a 6.6% sequential growth from INR1,207 crores in Q1 FY26. Consolidated PBIT for Q2 FY26 was INR111 crores, a notable 37% increase from INR81 crores in Q1 FY26, though it was lower than INR154 crores in Q2 FY25. For the first half of FY26, consolidated sales grew 4.2% to INR2,493 crores, while PBIT stood at INR192 crores, a decline from INR304 crores in H1 FY25, primarily due to impacts from VAW, RHODIUS, and standalone operations.

The Abrasives segment recorded a 7.4% YoY growth in Q2 FY26, reaching INR584 crores, with a strong 15% sequential increase, supported by AWUKO, RHODIUS, and CUMI America. Ceramics sales grew 7.8% YoY to INR301 crores in Q2 FY26, mainly driven by the Australian subsidiary. The Electrominerals segment experienced a marginal 0.9% YoY degrowth to INR399 crores in Q2 FY26, largely due to VAW. Consolidated Abrasives PBIT for H1 FY26 was INR45 crores, a 50% reduction from H1 FY25, while Ceramics PBIT for H1 FY26 was INR137 crores, a 4.9% decline from H1 FY25.

RHODIUS Abrasives saw H1 FY26 net sales of EUR30.6 million, a 9% degrowth YoY, and incurred a loss of EUR2.2 million, with a full-year loss after tax projected at EUR3.5-4 million, partly due to Q1 logistics issues. AWUKO achieved H1 FY26 sales of EUR5.5 million, growing 5.3% YoY, and is on track to meet its full-year sales target of EUR12-14 million. VAW's sales in local currency degrew 37.2% YoY in Q2 FY26 and 31% in H1 FY26, with management maintaining its guidance for a 25% volume drop for the full year due to sanctions. Foskor Zirconia's Q2 FY26 sales were ZAR114 million, but it reported a loss after tax of ZAR24 million.

The company's H1 FY26 capex spend was INR162 crores, aligning with its full-year plan of INR350 crores. These investments are strategically directed towards new growth areas including semiconductor facilities, aerospace and defence, HP SiC, and thin wheel relocation. Consolidated total debt stood at INR210 crores at the end of Q2 FY26, with a healthy debt-to-equity ratio of 0.06. Management highlighted that cash and cash equivalents, excluding VAW, amount to INR215 crores, effectively making the consolidated net debt zero.

Management reiterated its full-year FY26 guidance for consolidated sales growth (5.5-6.5%), Ceramics growth (16-18%), EMD growth (1-2%), and Abrasives growth (4-5%). Profitability targets include consolidated Ceramics margin of 23.5-23.7% and overall PBIT margin of 8.2-8.5%. The company anticipates a strong H2 for Abrasives and Ceramics, driven by sequential recovery, inventory normalization, and project execution. New initiatives in semiconductor ceramics are expected to contribute from FY27, with aerospace and defence programs following suit in FY27-FY28, aiming to double the company's size in the next five years.