Q3FY21 Result Update - Grindwell Norton - ICICI Direct

Grindwell Norton (GNL) reported strong Q2FY21 numbers across operational parameters owing to owing to better demand and revival in key sectors like automotive, industrial, construction, engineering amid economic recovery. Revenues were at Rs. 457.7 crore, decent growth of 11.6% YoY primarily aided by strong performance in ceramics & plastic segment. Revenue contribution from abrasives, ceramics & 'new initiatives' segment were at ~58%, ~34% & ~9%, respectively. Overall, EBITDA margins were at 21.4%, improving 460 bps YoY. This was primarily aided by reduction in overall operating expenses and better gross margins that improved 180 bps to 56.9%, YoY. PAT grew 40.3% to Rs. 66.0 crore YoY despite lower other income, which declined 35% YoY to Rs. 5.0 crore.

Valuation & Outlook

Going forward, we expect accelerated growth in plastics segment owing to niche value added products in life sciences. Also, a revival in industrial/automotive, engineering activities would gradually provide growth opportunities for abrasive, ceramics segments. Overall, we expect abrasives, ceramics, 'new initiatives' to grow at CAGR of 6.7%, 10.6%, 17.5%, respectively, in FY20-23E. We believe GNL is well placed to further gain from gradual economic revival in key segments. We introduce FY23E estimates and value GNL at 34x FY23E EPS to arrive at a target price of Rs. 805 (earlier Rs. 600). We change our rating form HOLD to BUY.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Grindwell_Q3FY21.pdf

Shares of GRINDWELL NORTON LTD. was last trading in BSE at Rs.747 as compared to the previous close of Rs. 703.75. The total number of shares traded during the day was 5124 in over 390 trades.

The stock hit an intraday high of Rs. 747 and intraday low of 702.95. The net turnover during the day was Rs. 3742948.

Source : Equity Bulls

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