PL First Cut – Grindwell Norton Q1FY24

PL First Cut – Grindwell Norton Q1FY24 – Amit Anwani – Research Analyst, Prabhudas Lilladher Pvt Ltd

Grindwell Norton Q1FY24 First Cut- muted Performance, results below estimates

Result Summary

✳️Consolidated sales grew 4.8% YoY to Rs6.7bn (PLe~ Rs7.6bn and consensus estimate of Rs7.2bn), driven by growth in Ceramics & Plastics segment.

✳️ Segment wise: Abrasives revenue came in at Rs3.3bn (down 0.4% YoY), while Ceramics & Plastics segment revenue grew 8.9% YoY to Rs2.8bn. Digital services revenue grew ~41% YoY to Rs505mn.

✳️EBITDA grew 4.9% YoY to Rs1.4bn, (PLe~ Rs1.5bn and consensus estimate of Rs1.5bn), with EBITDA margin remaining flat at 20.2% (PLe 19.7% and consensus estimate of ~21.1%) aided by gross margin expansion of 92bps on YoY (~54.7%) despite higher employee cost (up 15.2% YoY).

✳️ Segment wise Margin: Abrasives margins came in at 13.8% vs 14% in Q1FY23, Ceramics margins declined to 19.5% vs 23.9% in Q1FY23. Digital Services margin expanded to 38.4% vs 23% in Q1FY23.

✳️PAT grew 4.9% YoY to Rs970mn (PLe and consensus estimate of Rs1.1bn).

✳️The stock is currently trading at PE of 57.6x/48.2x/40.1x FY24/25/26E. We have Buy rating on stock with TP of Rs2,604,