Carborundum Universal Limited — Q3 FY26 earnings call

Call held 30 Jan 2026

Management summary

Carborundum Universal reported a mixed Q3 FY26, with strong standalone performance driven by sequential growth across segments and improved margins. However, consolidated results were impacted by continued challenges and losses in overseas subsidiaries like Rhodius, Awuko, and Foskor, as well as the impact of US sanctions on VAW. Management revised down full-year sales and PBIT margin guidance for some segments while maintaining overall sales growth and capex plans, expecting a strong Q4 for Ceramics.

Highlights

  • Standalone sales for Q3 FY26 reached INR 769 crores, marking a 5.6% YoY growth and 7.9% QoQ growth.

  • Consolidated sales for Q3 FY26 were INR 1,273 crores, a 2.5% YoY increase but a 1.1% QoQ drop.

  • Standalone PBIT for Q3 FY26 grew 32% QoQ to INR 115 crores, with PBIT margin improving to 15% from 12.2%.

  • Consolidated PAT for Q3 FY26 was INR 76 crores, significantly up from INR 35 crores in Q3 FY25 (which included an exceptional item).

  • FY26 consolidated sales growth guidance maintained at 5.5-6.5%, but Ceramics sales growth revised down to 13-14% from 16-18%.

  • Overall consolidated PBIT margin guidance for FY26 revised down to 7-8% from 8.2-8.5%.

  • Capex guidance for FY26 maintained at INR 350 crores, with INR 248 crores spent YTD 9M FY26.

  • Losses continued in overseas subsidiaries: Rhodius (EUR 0.84 million loss in Q3 FY26) and Awuko (EUR 2.7 million loss before tax in Q3 FY26).

Concerns

  • Awuko production halt and fixed cost absorption issues

  • Price pressure and currency appreciation impacting Foskor

  • US sanctions impacting VAW sales

Key financials

  1. Standalone Sales ₹769 Cr +5.6%YoY
  2. Standalone PBIT ₹115 Cr +5.3%YoY
  3. Standalone PBIT Margin 15%
  4. Standalone PAT ₹85 Cr +4.9%YoY
  5. Consolidated Sales ₹1,273 Cr +2.5%YoY
  6. Consolidated PAT ₹76 Cr +1.3%QoQ

What they filed

Q1 FY27: revenue up 17.1%, net profit up 33.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,224 1,255 1,217 1,219 1,298 +6%1,291 +3%1,398 +15%1,427 +17%
EBITDA195 177 146 121 156 −20%157 −11%144 −1%135 +12%
Net profit116 38 30 60 74 −36%73 +92%-40 −233%80 +33%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentSalesYoY Growth
Standalone Ceramics (Q3 FY26 Sales)₹255 Cr-3.8%
Standalone Electrominerals (Q3 FY26 Sales)₹229 Cr8.9%
Standalone Abrasives (Q3 FY26 Sales)₹323 Cr9.8%
Rhodius (Q3 FY26 Sales)₹14.8 Cr-3.5%
Awuko (Q3 FY26 Sales)₹2.4 Cr3%
Foskor (Q3 FY26 Sales)₹101 Cr-4.5%
VAW (Q3 FY26 Sales)₹1.4 Cr-46%

Order book

low confidence
Management expects a strong Q4 for Ceramics based on the existing order backlog, including bagging the highest-ever order in the last quarter.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹350 Cr
    We said we will spend INR350 crores for the full year, and we feel that we should be completing that INR350 crores of capex.
  • Debt Net ₹290 Cr
    Now total debt position, there was no debt in standalone books. The total consolidated debt was about INR290 crores in Q3 FY26, compared to INR210 crores in Q2 FY26 and, INR108 crores in the same period last year.
  • Liquidity Cash ₹385 Cr Consolidated cash and equivalents, excluding VAW.
    Cash and cash equivalents at the consolidated level without VAW was INR385 crores.

Guidance & targets

Revenue

  • Consolidated Sales Growth Revenue · FY26 · High confidence 5.5% to 6.5%
    During the last call, I said, growth in consolidated sales could be 5.5% to 6.5%. I maintain the same guidance.

    — Sridharan Rangarajan

  • Consolidated Ceramics Sales Growth Revenue · FY26 · High confidence 13% to 14%

    Previously 16% to 18% → 13% to 14%

    Consolidated Ceramics, we communicated a sales growth of 16% to 18% in the beginning of the year. We marginally bring this down from 13% to 14%.

    — Sridharan Rangarajan

  • Abrasives Sales Growth Revenue · FY26 · High confidence 4% to 5%
    Abrasives sales in our last call, we communicated to 4% to 5% for the year. I maintain the same.

    — Sridharan Rangarajan

  • Consolidated EMD Sales Growth Revenue · FY26 · High confidence 1% to 2%
    Consolidated EMD, we gave a guidance of 1% to 2% sales growth. I maintain the same.

    — Sridharan Rangarajan

  • Rhodius Full Year Sales Revenue · FY26 · High confidence EUR 60 million

    Previously EUR 62.6 million → EUR 60 million

    So, on a full year basis, we said in the last call that Rhodius will do same as last year in Q2, Q3 and Q4. So, this means an annual sales of 62.6 million. We now expect the full year sales to be about 60 million.

    — Sridharan Rangarajan

  • Ceramics Overall Growth Rate (India) Revenue · FY26 · Medium confidence 9% to 11%
    We expect that overall growth rate, we know that the current rate is 1.7%, but we expect this to be in the range of about 9% to 11% at the full year level.

    — Sridharan Rangarajan

  • Ceramics Engineered Ceramics/Fire Refractories Growth Revenue · Medium confidence 20%
    the set of businesses we have engineered ceramics, some of the fire refractories, all that growth, we are looking at growth of 20%.

    — Sridharan Rangarajan

Margin

  • Ceramic PBIT Margin Margin · FY26 · High confidence 21% to 22%

    Previously 23.5% to 23.7% → 21% to 22%

    In the Ceramic segment, we communicated PBIT margin of 23.5% to 23.7% on a full-year basis. We are likely to be at 21% to 22%.

    — Sridharan Rangarajan

  • EMD PBIT Margin Margin · FY26 · High confidence 4.5% to 5.5%
    EMD in the last call, we said 4.5% to 5.5% is the PBIT margin. We maintain the same guidance.

    — Sridharan Rangarajan

  • Abrasives PBIT Margin Margin · FY26 · High confidence 4% to 4.5%

    Previously 6% to 6.5% → 4% to 4.5%

    Abrasives, last time, we said PBIT margin would be 6% to 6.5% on a full year basis. We now revised that to 4% to 4.5%.

    — Sridharan Rangarajan

  • Overall Consolidated PBIT Margin Margin · FY26 · High confidence 7% to 8%

    Previously 8.2% to 8.5% → 7% to 8%

    We said the last time, the overall consolidated PBIT margin could be 8.2% to 8.5%. This could be 7% to 8%.

    — Sridharan Rangarajan

Capex

  • Full Year Capex Capex · FY26 · High confidence INR 350 crores
    On the capex side, we said we will spend INR350 crores on a full year basis. We spent so far INR248 crores on a 9-month basis. We maintain the full-year guidance of INR350 crores of capex.

    — Sridharan Rangarajan

Profitability

  • Rhodius Full Year Loss Profitability · FY26 · High confidence EUR 4.5 million
    We expect the full year loss to be in the range of EUR4.5 million after write-off of PPA about 2.8 million.

    — Sridharan Rangarajan

Market Share

  • EMD Export Mix Market Share · long-term · Medium confidence 30%
    So yes, the mix is improving more towards the export. That is helping us a lot. I think our aim is to have a 30% mix, that is 30% export mix on a long-term basis, but the current trend shows that even now, we are very close to that.

    — Sridharan Rangarajan

What to watch in Q4 FY26

Ceramics Segment Performance

next quarter
Current Q3 impacted by project delays, -3.8% YoY standalone sales
Target Strong Q4 performance, contributing to 9-11% full-year growth

Why it matters

Verifies management's expectation of Q4 recovery for the Ceramics segment, crucial for full-year guidance.

I think Ceramics, Q4 will be a strong quarter, first of all, because we feel that Ceramics on a full year basis, the projects are getting delayed, and that is what is causing us this challenge of Q3. But I think if you look at sequentially, they have done well on a standalone basis and we feel that Q4 will be a very strong quarter based on the order backlog that what we have.

Risks & concerns

  • Awuko production halt and fixed cost absorption issues

    high

    Awuko incurred higher losses due to no production in Q3 to optimize inventory, leading to poor fixed cost absorption.

    Management acknowledged

  • Price pressure and currency appreciation impacting Foskor

    high

    Foskor's sales and profitability were negatively impacted by price pressure from Chinese competition and the appreciation of the Rand.

    Management acknowledged

  • US sanctions impacting VAW sales

    high

    VAW's sales dropped significantly by 46% in Q3 FY26 due to US sanctions imposed in January 2025.

    Management acknowledged

  • Ceramics project delays and inspection issues

    medium

    Project delays and customer inspection issues are causing challenges in the Ceramics segment, impacting Q3 performance.

    Management acknowledged

  • Continued losses and seasonality in Rhodius

    medium

    Rhodius reported a loss of EUR 0.84 million in Q3 FY26, with Q3 being a seasonally lower quarter due to Christmas vacations.

    Management acknowledged

  • Uncertainty in US Ceramics market due to tariffs

    medium

    Customers in the US Ceramics market are delaying projects due to uncertainty regarding tariffs, impacting business.

    Management acknowledged

Q&A highlights

7 direct
Reasons for reduced Ceramics guidance and Q4 outlook Direct
I think Ceramics, Q4 will be a strong quarter, first of all, because we feel that Ceramics on a full year basis, the projects are getting delayed, and that is what is causing us this challenge of Q3. But I think if you look at sequentially, they have done well on a standalone basis and we feel that Q4 will be a very strong quarter based on the order backlog that what we have.

Management attributes the Q3 slowdown in Ceramics to project delays and expects a strong Q4 recovery, supported by a healthy order backlog, which is crucial for meeting revised full-year guidance.

Asked by Amit Anwani

Impact of EU Free Trade Agreement (FTA) on business Direct
So, I feel overall FTA will be beneficial to us. Right now, we are under the MFN category. So hence, definitely compared to that rate, MFN FTA rate will be definitely lower, at least to the extent of about 4% to 5% lower which definitely increases our competitiveness. Hence, it is more beneficial to us.

The EU FTA is expected to be beneficial, improving competitiveness by reducing tariffs by 4-5% compared to the current Most Favored Nation (MFN) status.

Asked by Amit Anwani

Outlook for Awuko and Rhodius for FY27 and Q4 FY26 Partial
Awuko will be on the similar trend is what our reading is, and we feel that the current trend would continue, and it could be better compared to the profitability because of the expenses getting spread over the production process because last quarter, we did not manufacture... as far as Rhodius is concerned, I feel normally Q4 is a better quarter compared to the Q3 because Q3 is a Christmas quarter. So that benefit I expect that it would come in terms of the top line.

Management expects Awuko's profitability to improve in Q4 due to resumed production, while Rhodius is anticipated to have a better Q4 top-line performance due to seasonality, though FY27 details are deferred.

Asked by Harshit Patel

Impact of China removing export rebate on abrasives Direct
So, this is a positive news as far as the Indian market is concerned and across. I mean, abrasives is one such product, but many products, the export benefit drop would benefit this. So, we think that this is a positive information, and it would definitely help us to strengthen our position.

The removal of China's export rebate on abrasives is viewed as a positive development for the Indian market, expected to enhance the company's competitive position.

Asked by Harshit Patel

Outlook and strategic plan for Foskor Zirconia Direct
So, Foskor does trouble us a lot and definitely impacting us... we have tapered down the ZC business. we are only focusing on Z450. So, the Q4 will have only Z450 operation, and we want to see how that performance is. If it is going to improve, that is fine. If not, we need to take a firm call. So, this is what our current approach is.

Management is actively addressing Foskor's losses by reducing focus on the ZC business and concentrating on Z450, with a firm decision on the future of the ZC operation pending Q4 performance.

Asked by Harshit Patel

Electrominerals domestic vs. export mix and margin differences Direct
So yes, the mix is improving more towards the export. That is helping us a lot. I think our aim is to have a 30% mix, that is 30% export mix on a long-term basis, but the current trend shows that even now, we are very close to that.

The shift towards a higher export mix in Electrominerals is seen as beneficial, with the company nearing its long-term target of 30% export contribution.

Asked by Harshit Patel

Performance of Ceramics sub-segments and FY27 outlook Direct
So we have two broad segments within that, which is ceramics and refractories. But the way we discussed in the last few calls, the set of businesses we have engineered ceramics, some of the fire refractories, all that growth, we are looking at growth of 20%.

Engineered ceramics and fire refractories within the Ceramics segment are identified as high-growth areas, with a target of 20% growth, indicating future drivers for the segment.

Asked by Harshit Patel

Timeline for strategic evaluation of Awuko and Foskor Direct
Foskor, as I communicated, probably 1 quarter to 2 quarters, we will take a call. And Awuko, we think that we should take a firm call in a year's time.

Management has set clear timelines for making strategic decisions regarding the loss-making Foskor (1-2 quarters) and Awuko (within a year), indicating potential restructuring or divestment.

Asked by Jonas Bhutta

3 min read 7 chapters

Detailed narrative

Overall Financial Performance and Standalone Strength

Carborundum Universal reported standalone sales of INR 769 crores for Q3 FY26, reflecting a 5.6% year-on-year growth and a 7.9% sequential increase. Standalone PBIT grew by 32% quarter-on-quarter to INR 115 crores, with the PBIT margin expanding to 15% from 12.2% in Q2 FY26. Standalone PAT for the quarter was INR 85 crores, up 4.9% YoY and 31% QoQ, demonstrating robust domestic performance.

Consolidated Performance and Segmental Overview

Consolidated sales for Q3 FY26 stood at INR 1,273 crores, a 2.5% YoY growth but a 1.1% sequential decline. Consolidated PAT was INR 76 crores, a significant improvement from INR 35 crores in Q3 FY25. Segment-wise, standalone Ceramics sales were INR 255 crores (up 11.9% QoQ), Electrominerals sales were INR 229 crores (up 7.9% QoQ), and Abrasives sales reached INR 323 crores (up 4.9% QoQ), indicating broad-based sequential growth in the domestic market.

Challenges in Overseas Subsidiaries

Overseas subsidiaries continued to face headwinds. Rhodius reported sales of EUR 14.8 million, a 3.5% YoY drop, and a loss after tax of EUR 0.84 million in Q3 FY26. Awuko's sales declined 19% QoQ to EUR 2.4 million, resulting in a loss before tax of EUR 2.7 million due to production halts. Foskor experienced a 4.5% YoY sales drop to ZAR 101 million and a loss after tax of ZAR 24 million, impacted by Chinese competition and currency appreciation. VAW's sales plummeted 46% YoY to RUB 1.4 billion due to US sanctions.

Strategic Adjustments and Outlook for Loss-Making Units

Management is taking decisive actions for its loss-making subsidiaries. For Foskor, the company is tapering down the ZC business, which has higher losses, to focus solely on Z450, with a firm decision expected within 1-2 quarters. A firm call on Awuko's future is anticipated within a year. Despite the challenges, management expects Rhodius to have a better Q4 top-line due to seasonality and Awuko's profitability to improve with resumed production.

Revised Guidance and Capex Plans

The company maintained its FY26 consolidated sales growth guidance at 5.5-6.5% and capex plan at INR 350 crores. However, guidance for consolidated Ceramics sales growth was revised down to 13-14% (from 16-18%), and Ceramics PBIT margin to 21-22% (from 23.5-23.7%). Abrasives PBIT margin guidance was also lowered to 4-4.5% (from 6-6.5%), leading to an overall consolidated PBIT margin revision to 7-8% (from 8.2-8.5%).

Debt Position and Liquidity

The consolidated debt position for Q3 FY26 stood at INR 290 crores, up from INR 210 crores in Q2 FY26. The consolidated debt-to-equity ratio was 0.07. Cash and equivalents at the consolidated level, excluding VAW, were INR 385 crores, indicating a manageable liquidity position despite increased debt.

Positive Tailwinds and Growth Drivers

Management highlighted positive developments such as the potential benefit from the EU FTA, which could reduce tariffs by 4-5% and enhance competitiveness. The removal of China's export rebate on abrasives is also seen as a positive for the domestic abrasives market. Within Ceramics, engineered ceramics and fire refractories are expected to grow at 20%, and the Electrominerals segment is strategically shifting towards a 30% export mix, which is seen as beneficial.

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