Fundamental Analysis of Carborundum Universal Ltd | Upside up to 26%

CMP : Rs. 341     Target : Rs. 431 Timeframe: 9 to 12 months

In this stock, if you park your money from today for 9 to 12 months you will get up to 26% return. Fundamental analysis of CARBORUNDUM UNIVERSAL LIMITED | Invest for 9 to 12 months for 26% upside Here are the reasons to invest in this stock.

Reasons to Invest:

 

  • The company pioneered the manufacture of Coated Abrasives and Bonded Abrasives in India in addition to the manufacture of Super Refractories, Electro Minerals, Industrial Ceramics and Ceramic Fibres. The company’s range of over 20,000 different varieties of
  • abrasives, refractory products, and electro minerals are manufactured in ten locations across various parts of the country.
  • It is one of the few manufacturers in the world with fully integrated operations from mining, fusioning , manufacturing, marketing, distribution, to power generation from wind and hydropower stations. Its products are exported to 43 countries spread across North America, Europe, Australia, South Africa and Asia.
  • It has completed the strategic relocation of its plants from South Africa and China in India and management targets to ramp up capacity from these plants in the next one year and expects around Rs.1000 crore growths in the top line.
  • According to the management of the company, the outlook for metalized cylinder (Metz) remains encouraging and volumes are expected to further improve in FY19/FY20.
  • Demand for ceramics has been driven by improved demand for value-added/engineered ceramics in the past few quarters (industrial ceramics). Further, the management expects margins to further improve driven by operating leverage and higher capacity utilization going ahead. The company has launched a new products (developed in-house) Z450 which is likely to significantly reduce graphite electrodes and power consumption.
  • During Q3FY18, its consolidated revenue grew 16% y-o-y led by volume growth across segments. While abrasives’ sales grew at 15% y-o-y, electro minerals’ sales growth sustained at 17% y-o-y. Ceramics recovered strongly with sales growing 18% y-o-y, driven by industrial segment.

Face Value: Rs. 1

52 Week High / Low  428.00 / 252.50

Market Cap: Rs. 6585.56 Cr

EPS: Rs. 10.36

Price Earning Ratio: 33.64

Price to Book Ratio: 4.51

Dividend Yield: 0.29%

Indian Promoter’s Holding: 43.58%

DII’s Holding: 21.76%

FII’s Holding: 4.54%

Valuation:

The company has witnessed consistent growth in each of its business segment. The debt-equity ratio for the company is nil at a standalone level and 0.19 at a consolidated level. Its balance sheet is robust and it augurs well for the company to venture into its next phase of growth. Turnaround across all the divisions led by global recovery for company’s products; it is best placed to attain scale across businesses with its new SBU (Strategic Business Unit) structure and focused product-wise branding strategy. Thus, it is expected that the stock will see a price target of Rs.431 in 8 to 10 months time frame on an expected P/E of 30x and FY19 EPS of Rs.14.36.

 

I have also done fundamental analysis of EIH Ltd. For more insight click here. In that stock, you will earn 25% profit too.

 

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Disclaimer:

My descriptions, videos, presentations are only for educational and information purposes and under no circumstances should be used for making investment decisions. I cannot guarantee the accuracy of any information provided.
The stocks picks are based on my own research and personal views and sometimes are from newspapers, tv channel program, magazines, etc. In addition, No part of compensation is or will be directly or indirectly related to the views and recommendations of this research. I have not served as an officer director or employee of the company and have not been engaged in the market – making the activity of the company covered in the research report. Hence Consult qualified financial advisor before making any investment decision.

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