Anand Rathi is bullish on Carborundum Universal has recommended buy rating on the stock with a target price of Rs 321 in its research report dated September 02, 2020.
Anand Rathi 's research report on Carborundum Universal
CUMI’s overall operations have picked up pace. Recovery is evident in its ceramics and electro-minerals divisions, in both domestic and international. Subdued demand from end users slowed recovery in abrasives. Management talked of 80-90% of last year’s utilisation by end-H1 FY20 across the businesses. Supply disruption of minerals from China is likely to benefit EMD business of CUMI. With greater utilisation, focus on operating efficiency, new product launches and quitting the loss-making Foskor, management is confident of steady margins ahead. We expect consol. EBITDAM to step up from 15.3% in FY20 to 16.5% in FY23 and drive earnings growth. CUMI remains our top pick, with a revised TP of `321 (20x FY23e).
Outlook
We expect consolidated EBITDAM to step up from 15.3% in FY20 to 16.5% in FY23 and drive earnings growth. The stock trades at 24x/19x/16x FY21e/22e/23e. We maintain a Buy rating with a TP of `321 (21x FY23e).
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