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Carborundum Universal Limited — Q4 FY26 earnings call

Call held 15 May 2026

Management summary

Carborundum Universal Limited reported a strong standalone performance in FY26, with PAT growing 29.4% and sales crossing INR 3,000 crores. Consolidated sales also grew 6.5% to over INR 5,000 crores, driven by a robust H2 recovery. However, consolidated profitability was impacted by significant losses from international subsidiaries, leading to a 27.2% decline in PBT before exceptional items. The company is undertaking strategic restructuring of these loss-making entities and has outlined substantial CAPEX plans for FY27 to drive future growth in advanced materials and core segments.

Highlights

Consolidated Sales grew 6.5% YoY to INR 5,149 crores, surpassing INR 5,000 crores.
Standalone PAT grew 29.4% YoY to INR 416 crores, with Q4 PAT doubling YoY to INR 122 crores.
Consolidated FCF to PAT was 56.6% in FY26, a substantial increase from 16.1% in FY25.
Electrominerals exports demonstrated strong growth of 100% YoY, now contributing over 33% of total sales.
The company maintains a healthy financial position, being net debt-free with a debt-equity ratio of 0.08.

Concerns

Consolidated PBT before exceptional items declined 27.2% YoY to INR 416 crores, primarily due to losses from subsidiaries.
Exceptional items of INR 135 crores were recorded in FY26, largely due to the voluntary winding-up of Awuko (INR 119 crores).
Consolidated Electrominerals growth was muted at 3.7% due to lower sales at VAW Russia and higher losses at Foskor Zirconia.

Key financials

01 Consolidated Sales ₹5,149 Cr +6.5%YoY
02 Standalone Sales ₹3,024 Cr +8.6%YoY
03 Consolidated PBT (pre-exceptional) ₹416 Cr -27.2%YoY
04 Standalone PAT ₹416 Cr +29.4%YoY
05 Consolidated PBIT ₹404 Cr -25.3%YoY
06 Standalone PBIT ₹525 Cr +23.4%YoY

What they filed

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

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	1,224	1,255	1,217	1,219	1,298 +6%	1,291 +3%	1,398 +15%	1,427 +17%
Expenses	1,029	1,078	1,071	1,098	1,142	1,134	1,254	1,292
EBITDA	195	177	146	121	156 −20%	157 −11%	144 −1%	135 +12%
Margin	16%	14%	12%	10%	12%	12%	10%	9%
Other income	23	-77	18	27	23	22	-103	55
Interest	4	4	3	3	4	5	6	6
Depreciation	52	53	56	59	62	61	65	66
Profit before tax	162	43	105	86	113 −30%	113 +163%	-30 −129%	119 +38%
Tax rate	28%	13%	71%	30%	34%	35%	34%	33%
Net profit	116	38	30	60	74 −36%	73 +92%	-40 −233%	80 +33%
EPS	6.09	1.83	1.53	3.25	3.91	3.99	-0.92	4.01

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

Share of Sales

₹8,347 Cr Total

Consolidated Abrasives ₹2,271 Cr 27.2%
Consolidated Electrominerals ₹1,632 Cr 19.6%
Standalone Abrasives ₹1,270 Cr 15.2%
Consolidated Ceramics ₹1,268 Cr 15.2%
Standalone Ceramics ₹1,000 Cr 12.0%
Standalone Electrominerals ₹906 Cr 10.9%

Order book

qualitative confidence

Cancellations & deferrals

deferred: Deferred projects, especially in the glass segment, impacted Refractory business in H1 FY26, but saw a strong return later.

Management noted a strong rebound in H2 FY26 across segments, driven by go-to-market initiatives, new product introductions, and market expansion. They also mentioned strong orders with OEMs in Australia and a line of sight for the SOFC segment up to 2028.

Source: Prepared remarks

Capital allocation

high confidence

Capex ₹400 Cr internal accruals
- Advanced Ceramics for power electronics (substrate, metallized tubes, rings, braced assemblies)
- Brown Fused Alumina
- Integrated furnace facility for thermal spray powders
- Zirconia furnace and grain processing facility
- 110 kV substation and tunnel kiln for Refractories
Previously planned ₹350 Cr

Consolidated CAPEX was INR 309 crores, of which standalone constituted INR 235 crores. We communicated CAPEX estimate of INR 350 crores during our last calls... We expect to do a CAPEX of about INR 400 crores in FY27. The key CAPEX program for FY26 includes expansion of Advanced Ceramics for power electronics, including substrate, metallized tubes, rings, braced assemblies, expansion of Brown Fused Alumina, addition of an integrated furnace facility for thermal spray powders and Zirconia furnace and grain processing facility. We also intend to do 110 kV substation and tunnel kiln for Refractories. These are the major projects which should account for about INR 400 crores of CAPEX.
Debt Debt disclosed

The debt-equity ratio is 0.08.
M&A Awuko Divestment · Pending regulatory

Continued underperformance, mounting losses, inability to turn around due to market conditions.
Exceptional items relating to closure amount to INR 119 crores. Loss before exceptional and tax increased from EUR 6.6 million to EUR 7.7 million in FY26.

During the financial year, CUMI International Limited, the holding company of Awuko, approved to initiate the closure of Awuko through a voluntary winding-up process under the applicable laws in Germany, considering the continued underperformance of the subsidiary with the mounting losses and its inability to turn around in view of the prevailing market conditions. So, exceptional items relating to this closure amounts to INR 119 crores.
M&A Foskor Zirconia (Pty) Limited Divestment · Abandoned

Unable to achieve sustainable profits since 2013, escalating electricity/input costs, intensifying global competition, foreign exchange fluctuations rendered business commercially unviable.
Consolidated FY26 financials include INR 16 crores relating to the write-down of various assets to the realisable value. Loss after tax (without exceptional effect) increased from ZAR 27 million to ZAR 77 million in FY26.

Accordingly, the Board of Foskor Zirconia, based on the recommendations of the management, has concluded that it is not in a position to continue the operations and there is no realistic alternative and will be seeking requisite approvals in this process. Accordingly, the consolidated FY26 financials include the impact of INR 16 crores relating to the write-down of various assets to the realisable value.
Liquidity Liquidity disclosed The company is net debt-free and has strong free cash flow, enabling it to fund its CAPEX programs internally.

CUMI has achieved good free cash flow after meeting all CAPEX investment. It is a good sign and CUMI is net debt-free.

Guidance & targets

Revenue

Consolidated Sales Growth Revenue · FY27 · High confidence 4% to 4.5%

At the consolidated level, we expect the sales to grow approximately 4% to 4.5% in FY27.

— Sridharan Rangarajan
Consolidated Sales Growth (Excl. Awuko & Foskor) Revenue · FY27 · High confidence 11% to 12%

However, if we exclude the revenue contributed from Foskor Zirconia and CUMI Awuko, which accounts to INR 343 crores in FY26 sales, and compare it with our business plan, comparable growth will be 11% to 12%.

— Sridharan Rangarajan
Consolidated Abrasive Sales Growth Revenue · FY27 · High confidence 5.5% to 6%

Consolidated Abrasive sales are expected to grow by 5.5% to 6%.

— Sridharan Rangarajan
Consolidated Abrasive Sales Growth (Excl. Awuko) Revenue · FY27 · High confidence 11% to 12%

However, if we exclude the revenue from Awuko, which is about INR 108 crores in FY26, sales growth will be 11% to 12%.

— Sridharan Rangarajan
Consolidated Ceramic Growth Revenue · FY27 · High confidence 15% to 15.5%

Consolidated Ceramic growth is expected to be in the range of 15% to 15.5%.

— Sridharan Rangarajan
Consolidated Electrominerals Sales Decline Revenue · FY27 · High confidence 6.5% to 7%

Consolidated Electrominerals sales are expected to decline by 6.5% to 7% on account of the closure of Foskor Zirconia, which accounted for INR 235 crores in FY26.

— Sridharan Rangarajan
Consolidated Electrominerals Sales Growth (Excl. Foskor) Revenue · FY27 · High confidence 8% to 9%

However, if we exclude the revenue contribution from Foskor Zirconia in FY26 and compare it with what we are planning to do in FY27, the growth would be 8% to 9%.

— Sridharan Rangarajan
Rhodius Abrasives Sales Growth Revenue · FY27 · High confidence 5%

We expect sales in FY27 to grow by 5% in FY27.

— Sridharan Rangarajan
Semiconductor Material Revenue Generation Revenue · 2029 onwards · High confidence 2029 onwards

2029 onwards, we can expect (material revenue generation from that).

— Sridharan Rangarajan

Margin

Consolidated Abrasives Margins Margin · FY27 · High confidence 9.5% to 10%

From 4.3% today

Consolidated Abrasives margins are expected to be around 9.5% to 10%. The reported margin in FY26 is 4.3%.

— Sridharan Rangarajan
Consolidated Ceramics Margins Margin · FY27 · High confidence 20.5% to 21%

From 20.2% today

Consolidated Ceramics margin would be 20.5% to 21%. The reported margin is 20.2%.

— Sridharan Rangarajan
Consolidated Electrominerals Margins Margin · FY27 · High confidence 9% to 9.5%

From 5.6% today

Consolidated Electrominerals margin could be 9% to 9.5%. In FY26, the reported margin is 5.6%.

— Sridharan Rangarajan

Capex

Total CAPEX Capex · FY27 · High confidence INR 400 crores

We expect to do a CAPEX of about INR 400 crores in FY27.

— Sridharan Rangarajan

Profitability

Rhodius Abrasives PAT Profitability · FY27 · High confidence very small loss

From EUR 2.6 million loss today

We expect FY27 the PAT to be a very small loss.

— Sridharan Rangarajan

Market Share

Electrominerals Core Products Share Market Share · by 2030 · High confidence 55% to 60%

From 85% today

While the core products will continue to form the bulk of our product basket, its share is expected to current level of 85%. It will come down to 55% to 60% by 2030 as other product categories would scale up.

— Sridharan Rangarajan
Electrominerals Treated Products Share Market Share · by 2030 · High confidence ~20%

From 5% to 6% today

We aim to increase the share of treated-grains from 5% to 6% at the current level, nearly 20% by 2030.

— Sridharan Rangarajan
Electrominerals Specialty Products Share Market Share · by 2030 · High confidence 18% to 20%

From 8% today

Collectively, this suite of Zirconia-based products will form specialty products portfolio, whose share is expected to increase from 8% currently to 18% to 20% by 2030.

— Sridharan Rangarajan
Electrominerals Transformational Products Share Market Share · by 2030 · High confidence ~10%

From very little today

We expect transformational products to contribute around 10% by 2030 compared to the current level, practically very little.

— Sridharan Rangarajan

R&D

R&D Spend as % of Sales R&D · next few years · High confidence 2% to 3%

From ~1% today

We spend roughly about 1% as R&D and I think this needs to go up and we expect that we should at least start spending 2% to 3% level.

— Sridharan Rangarajan

ESG

Renewable Energy Use ESG · by 2030 · High confidence 50%

Increasing renewable energy use to 50%
Emission Intensity Reduction ESG · by 2030 · High confidence 25%

reducing emission intensity by 25%
Energy Intensity Reduction ESG · by 2030 · High confidence 20%

lowering energy intensity by 20% from FY2025 levels.

What to watch in Q1 FY27

Consolidated Sales Growth

FY27

Current 6.5% in FY26

Target 4-4.5% (or 11-12% excl. Awuko/Foskor) in FY27

Why it matters

Key indicator of overall business health and execution against new guidance post-restructuring of subsidiaries.

At the consolidated level, we expect the sales to grow approximately 4% to 4.5% in FY27. However, if we exclude the revenue contributed from Foskor Zirconia and CUMI Awuko, which accounts to INR 343 crores in FY26 sales, and compare it with our business plan, comparable growth will be 11% to 12%.

Risks & concerns

Loss-making Subsidiaries (Awuko, Foskor, Rhodius, VAW)
high

Losses from these subsidiaries significantly impacted consolidated PBT in FY26 (INR 87cr VAW, INR 22cr Foskor, INR 19cr Awuko, INR 46cr Rhodius). Awuko is being wound up and Foskor operations are ceasing.

Management acknowledged
Sanctions on VAW Russia Operations
high

US sanctions led to a 35.3% decline in VAW Russia's sales and reduced profits. Management stated it's difficult to find an alternative solution or recreate capacity elsewhere, requiring a wait for sanctions to be lifted.

Management acknowledged
Logistics Transition Impact on Rhodius Abrasives
medium

A transition to a new 3rd-party logistics partner in Q1 FY26 resulted in a EUR 5 million loss of sales for Rhodius, contributing to its increased PAT loss in FY26.

Management acknowledged
Zircon Sand Price Volatility for Foskor Zirconia
medium

Volatility in Zircon Sand price, a drop in ZAR 450 price, and RAND appreciation against USD impacted Foskor Zirconia's bottom line, contributing to its increased losses.

Management acknowledged
Ceramics Growth Miss due to Deferred Projects
low

The Ceramics segment missed its FY26 growth guidance (achieved 9.3% vs 13-14% guided) primarily due to deferred projects, although management expects to meet higher targets in FY27.

Management acknowledged

Q&A highlights

6 direct, 1 evasive

SOFC Segment Growth and Future Contribution Partial

Definitely, it will be a meaningful share that we will have. As we said, the Engineered segment itself is currently one-third of the business that substantially it would grow up is our belief.

Analyst probed for specific future revenue contribution from the high-growth SOFC segment, which management indicated would be substantial for the Engineered segment but did not quantify further.

Asked by Jonas Bhutta

New CAPEX for Semiconductor OEM Products Direct

We have crossed the qualification stage on a set of products and this is an initial investment. As I said, we expect that this investment could go at least 3x to 4x higher and we are geared for that. We also expect the revenue potential also is substantial in this industry.

Revealed that initial CAPEX for semiconductor components is just the start, with significant future investment and revenue potential, indicating a long-term growth driver.

Asked by Jonas Bhutta

Impact of China's Export Rebate Removal on Abrasives Direct

It's a very recent phenomenon at this point in time... But I think overall, we see a rebound and our work in terms of all the areas, whether it is GTM initiatives, new products that we introduce, bringing cost down of our products, all these combined efforts of our strategy is playing out. This we have been doing over the last 18 to 24 months is now playing out.

Addressed a key competitive factor, suggesting a positive impact on the domestic industry and CUMI's market position, contributing to the observed H2 recovery.

Asked by Harshit Patel

Rhodius Abrasives Turnaround Strategy Direct

So, if you see the last year, the big reason for the drop in is last year, we had almost EUR 5 million impact in terms of the logistics change and that really affected the top-line change. And we feel that they have been growing in the range of about 6% to 7% and we feel that that growth should happen and second is that because of this loss of sale as well as the margin impact due to this loss of sale, along with the logistics costs on the shift, these things would come down, and hence we feel that we should get back to a small loss or a breakeven.

Provided specific reasons for Rhodius's underperformance and a clear path to recovery, including resolving logistics issues and a dedicated profitability program.

Asked by Amit

Alternative Strategy for Russian Subsidiary (VAW) Evasive

Honestly, it's difficult to create a capacity and the cost would be pretty high. So, it's going to be very difficult to recreate anything like that. But at the same time, Russia is not in a position to export products, which is what we are currently going through. So, practically, we need to wait for the sanctions to be lifted, which gives us an ability to go beyond Russia. So, at this stage, we don't have an alternate solution for this.

Management acknowledged the significant challenge posed by sanctions on VAW Russia and admitted to having no viable alternative strategy, indicating continued uncertainty for this operation.

Asked by Akshay Thakur

R&D Investment and Focus Areas for Ceramics Direct

We spend roughly about 1% as R&D and I think this needs to go up and we expect that we should at least start spending 2% to 3% level. We are working in terms of strengthening our R&D team across individual Bus and we are also strengthening the new product development process, coupled with software-enabled process so that we kind of make sure that we do the right thing in terms of the new product, getting the right input from the market, customers and the users.

Highlighted a strategic shift towards increasing R&D investment and strengthening the R&D process to drive innovation, particularly crucial for the high-growth Ceramics segment.

Asked by Chintan

Gap in Ceramics Growth Guidance vs. Achievement Direct

I think why did we miss? I think that is the only area we missed our guideline. It is largely because of deferred projects, which I think is substantially the one-line reason for why did we miss our guideline and why do we think that we can meet 15 is the backlog and the forecast from our customer gives us that confidence.

Clarified that the miss in Ceramics growth was due to deferred projects, not structural issues, and expressed confidence in achieving the higher guidance for FY27 based on current backlog and customer forecasts.

Asked by Pravesh Kochar

Timeline for Semiconductor Material Revenue Generation Direct

2029 onwards, we can expect (material revenue generation from that).

Provided a specific timeline for when the significant investments in semiconductor wafer fab equipment components are expected to start generating material revenue, offering clarity on the long-term growth trajectory.

Asked by Preet Jain

3 min read 6 chapters

Detailed narrative

Strong Standalone Performance and H2 Recovery

Carborundum Universal Limited delivered a robust standalone performance in FY26, with sales growing 8.6% YoY to INR 3,024 crores, surpassing the INR 3,000 crore mark. This growth was significantly bolstered by a strong rebound in the second half, where standalone sales increased 14.4% sequentially from H1 to H2 FY26. Standalone PAT also saw a healthy 29.4% YoY growth, reaching INR 416 crores, with Q4 FY26 PAT doubling to INR 122 crores compared to Q4 FY25.

Consolidated Growth Amidst Subsidiary Profitability Challenges

Consolidated sales grew 6.5% YoY to INR 5,149 crores, exceeding the INR 5,000 crore milestone. However, consolidated PBT before exceptional items declined 27.2% YoY to INR 416 crores. This decline was primarily attributed to significant losses from international subsidiaries, including VAW (INR 87 crores), Foskor (INR 22 crores), Awuko (INR 19 crores), and Rhodius (INR 46 crores). The company recorded INR 135 crores in exceptional items, largely due to the voluntary winding-up of Awuko (INR 119 crores).

Strategic Restructuring and Future Margin Improvement

To address the drag from loss-making entities, CUMI initiated the voluntary winding-up of Awuko Abrasives and concluded that Foskor Zirconia's operations are unsustainable. These strategic decisions, while impacting FY26 profitability, are expected to significantly improve future consolidated margins. Management guided for consolidated Abrasives margins to improve from 4.3% in FY26 (7.9% excluding Awuko losses) to 9.5-10% in FY27, and Electrominerals margins from 5.6% (9.1% excluding Foskor losses) to 9-9.5% in FY27.

Aggressive CAPEX for Capacity Expansion and New Technologies

CUMI invested INR 309 crores in CAPEX in FY26 and plans a further INR 400 crores for FY27. Key investments include INR 66 crores for semiconductor wafer fab equipment components, INR 49 crores for aerospace and defence ceramics, and INR 83 crores for thin wheel capacity. These projects are aimed at expanding capacity in high-growth areas and developing new technologies. The company emphasized its ability to fund these investments internally, being net debt-free with a debt-equity ratio of 0.08 and strong free cash flow (56.6% to PAT in FY26).

Aspiration 2030: Focus on Innovation and Transformational Products

The company's Aspiration 2030 strategy centers on ambitious growth, innovation, and exploring new opportunities. This includes increasing R&D spend from approximately 1% to 2-3% of sales. Significant progress was made in transformational products, with a pilot facility for SOFC powders commissioned in FY26 and 5N purity achieved for HPSiC. Material revenue generation from semiconductor components is projected from 2029 onwards, with transformational products expected to contribute around 10% of sales by 2030.

Segmental Outlook and Export-Driven Growth

The Ceramics segment is projected for strong growth of 15-15.5% in FY27, driven by demand in Engineering Ceramics and SOFC applications. Electrominerals exports grew 100% in FY26, now accounting for over 33% of total sales, and are expected to drive an 8-9% growth in FY27 (excluding Foskor). Abrasives, after a strong H2 recovery, is guided for 5.5-6% growth in FY27 (11-12% excluding Awuko), supported by go-to-market initiatives and favorable market conditions like the removal of China's export rebate.

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