Carborundum Universal Limited

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 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.

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.

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.

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%).

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.

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.