Buy Carborundum Universal Ltd ; target of Rs 418: Kotak Securities

Kotak Securities's research report on Carborundum Universal Ltd

CUMI Q3FY18 result was in line with our estimate. Volumes across divisions have started to pick up with exception to channel abrasives, severed by GST rollout. Industrial ceramics and EMD division have been witnessing rising demand across geographies. Company’s Russian subsidiary VAW reported significant volume led growth in the quarter.

Outlook

We are encouraged by the strong growth reported across key high margin products and expect earnings momentum to flow into FY19/20. We expect turnaround across all the divisions led by global recovery for company’s products. In view of significant upside to our target price, we upgrade CUMI stock (ascribe PER 22x FY20 estimated earnings) to BUY (SELL earlier) with revised price target of Rs 418 (Rs 408 earlier).

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