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ICICI Securities Report
Grindwell Norton Ltd. has reported a strong beat, benefiting from robust domestic industrial demand and exports (up 22.5% in FY22) in Q1 FY23.
Overall revenue grew 41% YoY to Rs 6.2 billion. Revenue increase was led by 55% YoY growth in ceramics and plastics and 34% YoY growth in abrasive segment.
Despite 360 basis points YoY contraction in gross margin, Ebitda margin expanded 20 bps to 20.4% on higher operating leverage.
Ebitda /adjusted profit after tax grew 42% / 39% YoY, respectively. We believe Grindwell Norton has been consistently delivering strong earnings led by its strong product portfolio, coupled with robust demand mainly in segments such as industrial, construction, paints, infra and metal finishing etc.
The recovery in auto sector is expected to further boost growth. Factoring in strong performance in a tough macro environment, we upgrade our earnings estimate for FY23/FY24 by 10% each.
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