Q4FY21 Result Update - Grindwell Norton - ICICI Direct

Grindwell Norton (GNL) reported strong Q4FY21 numbers across operational parameters owing to better demand, favourable product mix and revival in key sectors like automotive, industrial, construction, engineering amid economic recovery. Revenues came in at Rs. 508.8 crore, up a strong 39.1% YoY (amid low base) while it grew 11.2% on a QoQ basis, primarily aided by strong performance in the ceramics & plastic segment. Revenue contribution from abrasives, ceramics & IT services were at ~60%, ~32.5% & ~6.5%, respectively. Overall, EBITDA margins were at 22.2%, improving significantly by 570 bps YoY whereas it improved 80 bps QoQ. This was primarily aided by a reduction in overall operating expenses and better gross margins, which improved 140 bps to 56.7% YoY. PAT grew 92.9% to Rs. 80.6 crore YoY, partly aided by higher other income.

Valuation & Outlook

Going forward, accelerated growth in the plastics segment is expected to continue owing to niche value added products and solutions approach in performance plastics, performance ceramics & refractories segment and focus on export of niche high value products. We believe GNL is well placed to further gain from gradual economic revival in key segments. Overall, we expect abrasives, ceramics to grow at CAGR of 15%, 18.5%, respectively, in FY21-23E. We value GNL at 45x on FY23E EPS on the back of sustained superior margins with a target price of Rs. 1310 (earlier TP Rs. 805) and maintain BUY rating.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Grindwell_Q4FY21.pdf

Shares of GRINDWELL NORTON LTD. was last trading in BSE at Rs.1240.15 as compared to the previous close of Rs. 1113.1. The total number of shares traded during the day was 30915 in over 4012 trades.

The stock hit an intraday high of Rs. 1288 and intraday low of 1096.3. The net turnover during the day was Rs. 38027143.

Source : Equity Bulls

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