Summary
Carborundum Universal Limited - Q3 FY 2026 Earnings Call Summary Friday, January 30, 2026, 11:00 AM IST
Event Participants
Executives 2 G. Chandramouli (Advisor, Investor Relations), Sridharan Rangarajan (Managing Director)
Analysts 4 Amit Anwani (Prabhudas Lilladher), Harshit Patel (Equirus Securities), Jonas Bhutta (Birla Mutual Funds), Kunal Shah (DAM Capital Advisors)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Consolidated Revenue | ₹1,273 crores | +2.5% YoY, -1.1% QoQ; Growth led by Abrasives (+8.1%) offset by EMD decline. |
| Standalone Revenue | ₹769 crores | +5.6% YoY, +7.9% QoQ; Sequential growth driven by Ceramics (+11.9%) and EMD (+7.9%). |
| Consolidated PBIT | ₹109 crores | -22.7% YoY, Flat QoQ; Impacted by higher losses in Awuko and Foskor Zirconia. |
| Standalone PBIT | ₹115 crores | +5.3% YoY, +32% QoQ; Standalone margins improved to 15% from 12.2% in Q2. |
| Consolidated PAT | ₹76 crores | +117% YoY (base effect), +1.3% QoQ; Q3 FY25 PAT included exceptional items related to VAW. |
| Standalone PAT | ₹85 crores | +4.9% YoY, +31% QoQ; PAT margin improved to 11.1% from 9% in Q2. |
| Consolidated Debt | ₹290 crores | Increased from ₹108 crores YoY; Debt-equity remains low at 0.07x. |
| Capex (9 Months) | ₹248 crores | On track to meet full-year guidance of ₹350 crores for capacity expansion. |
Geographic & Segment Commentary
- Abrasives: Standalone business grew 9.8% YoY driven by retail and industrial segments. European subsidiaries Rhodius and Awuko faced seasonal headwinds and production pauses, leading to a consolidated PBIT drop of 28% YoY.
- Ceramics: Consolidated sales were flat YoY at ₹316 crores. While high-end applications like SOFC grew >20%, wear ceramics were sluggish due to US project delays and tariff uncertainties; a strong recovery is expected in Q4 due to order backlog.
- Electrominerals (EMD): Standalone EMD grew 8.9% YoY supported by strong exports. Russian subsidiary VAW saw a 28% revenue drop due to US sanctions, while South African subsidiary Foskor grew volumes by 22% but faced margin pressure from Chinese competition and Rand appreciation.
Company-Specific & Strategic Commentary
- Subsidiary Rationalization: Management is reviewing underperforming assets, specifically tapering down the ZC business at Foskor Zirconia to focus on Z450, with a firm decision on divestment/closure expected within 1-2 quarters.
- European Operations: Awuko’s performance remains a concern due to fixed cost under-absorption; management has set a one-year timeline to evaluate the long-term viability of this asset.
- Market Competitiveness: The removal of export rebates by China (9% to 0%) on abrasive products is viewed as a significant tailwind for domestic market share gains starting April 2026.
- Capacity Building: Maintaining a ₹350 crore capex plan focused on technology tie-ups and capacity creation in Ceramics and Electrominerals to support long-term strategy.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Consolidated Revenue | 5.5% - 6.5% Growth | Maintained previous guidance despite Q3 softness. |
| Ceramics Growth | 13% - 14% (Revised) | Lowered from 16-18% due to project delays; Standalone expected at 9-11%. |
| Abrasives PBIT Margin | 4% - 4.5% (Revised) | Lowered from 6.0-6.5% due to higher losses in Awuko. |
| Consolidated PBIT Margin | 7% - 8% (Revised) | Lowered from 8.2-8.5% reflecting subsidiary headwinds. |
| Capex | ₹350 crores (FY26) | Funding technology upgrades and capacity for new-age applications. |
Risks & Constraints
| Risk | Context |
|---|---|
| Subsidiary Losses | Rhodius and Awuko incurred combined 9-month losses of ~€8.1 million; management admits total loss funding has reached ~€30 million over 4 years. |
| Geopolitical Sanctions | VAW (Russia) revenue dropped 46% in RUB terms this quarter due to ongoing US sanctions, limiting consolidated EMD growth. |
| Currency & Pricing | Foskor (South Africa) faces a “triple hit” of 13% pricing drops due to Chinese competition, 8% Rand appreciation, and high fixed costs. |
Q&A Highlights
Subsidiary Performance & Exit Timelines
- Question: What is the timeline for taking a call on underperforming subsidiaries like Foskor and Awuko? (Jonas Bhutta)
- Answer: A firm decision on Foskor will be taken within 1-2 quarters. For Awuko, management has set a timeline of one year to see a turnaround in the top line and profitability (Sridharan Rangarajan).
Ceramics Strategy & SOFC
- Question: Is the growth in SOFC and new-age applications already reflected in the numbers? (Jonas Bhutta)
- Answer: High-end segments are growing at 20%+ with record order bookings last quarter. Muted segment growth is purely due to project bunching in Q4 and US wear-ceramic delays (Sridharan Rangarajan).
China Export Rebate Impact
- Question: Will China’s removal of the 9% export rebate help domestic market share? (Harshit Patel)
- Answer: This is highly positive and will strengthen the company’s competitive position in the Indian market against Chinese imports (Sridharan Rangarajan).
Key Takeaway
Carborundum Universal delivered a resilient standalone performance with 7.9% sequential revenue growth and improved PBIT margins of 15%, though consolidated results remained pressured by loss-making overseas subsidiaries. The Abrasives segment saw encouraging domestic growth of 9.8%, and the Ceramics division secured record orders in high-end applications like SOFC, despite temporary delays in US wear-ceramic projects. Management has proactively lowered full-year consolidated PBIT margin guidance to 7-8% to reflect €30 million in cumulative losses at Awuko and continued pricing pressure at Foskor Zirconia. Strategic focus remains on rationalizing these underperforming assets within the next 12 months while investing ₹350 crores in domestic capacity. Investors should watch for the anticipated Q4 recovery in Ceramics and the execution of the exit/turnaround strategy for European and South African operations.
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