Carborundum Universal Q2 FY27 Earnings Call: Record Sales of Rs. 911 Cr, Retains 15% FY27 Growth (CARBORUNIV)

Carborundum Universal Ltd held its Q2 FY27 earnings call on November 02, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Record Standalone Quarter; Exceptionals Weigh on Consolidated PAT

• Record standalone sales of Rs.911 cr in Q2 FY 2026-2027 — +28% YoY (vs Rs.712 cr) and +7.7% QoQ (vs Rs.846 cr), the highest-ever quarterly sales with management citing 14-quarter-high margins/QoQ growth; H1 FY27 standalone at Rs.1,757 cr (+24.6% YoY).
• Consolidated sales of Rs.1,455 cr — +13.1% YoY and +3.1% QoQ; H1 FY27 consolidated at Rs.2,865 cr (+14.9% YoY).
• Standalone PAT of Rs.72 cr (+12.4% YoY) — down from Rs.88 cr in Q1 FY27 on seasonally higher Q1 dividend income; H1 FY27 standalone PAT Rs.160 cr vs Rs.209 cr in H1 FY26, which included a one-time Rs.68 cr dividend from a subsidiary.
• Consolidated PAT after non-controlling interests fell to Rs.12 cr — vs Rs.75 cr in Q2 FY26, due to Rs.80.3 cr of exceptional items; H1 FY27 consolidated PAT Rs.89 cr vs Rs.136 cr.
• Consolidated pre-exceptional PBT of Rs.138 cr (+22.9% YoY, +16% QoQ) — H1 FY27 at Rs.257 cr (+29.8% YoY), which management characterized as evidence of very strong operational performance (segment results ex-exceptional up 36% on 15% top line growth).
• Balance sheet remains light — consolidated debt Rs.362 cr, cash Rs.251 cr (ex-VAW), net debt Rs.111 cr, debt-to-equity 0.09; H1 FY27 capex Rs.127 cr vs Rs.162 cr in H1 FY26.

Ceramics the Standout; Abrasives PBIT Under Cost Pressure

• Ceramics consolidated PBIT of Rs.101 cr (+62.1% YoY, +36.5% QoQ) — consolidated sales Rs.410 cr (+36.1% YoY) with growth in all three regions (India, Americas, Australia); standalone ceramics sales Rs.313 cr (+37.2% YoY).
• Electro minerals standalone PBIT of Rs.29 cr (+49.1% YoY, but -24% QoQ) — management attributed the QoQ margin dip to product mix and industry mix, calling it not significant and expecting margins to get back; consolidated EMD PBIT fell 20.9% YoY to Rs.26 cr on lower Foskor Zirconia sales.
• Abrasives standalone PBIT fell 19.9% YoY to Rs.37 cr — standalone sales Rs.357 cr (+15.9% YoY) were volume-led and broad-based across precision/industrial/retail, but cost of manufacturing rose on higher fuel prices and phenol resins from oil price increases, with only a very small portion passed on to the market.
• Subsidiary EBIT contribution nearly doubled YoY from Rs.17 cr to Rs.34 cr — Chandramouli attributed the strength to all three geographies (US, Australia, India) doing well rather than any single subsidiary such as Silicon Carbide Products LLC or Kumi Australia.
• VAW Russia broadly flat — Q2 FY27 sales RUB 1.55 bn; PAT RUB 98.7 mn vs RUB 222 mn in Q2 FY26, though improved from RUB 52.1 mn in Q1 FY27; no volume improvement expected in H2 FY 2026-2027.

Abrasives Margin Seen as Bottomed; Oil-Linked Cost Push Not Yet Passed On

• Standalone abrasives margins declined to ~10% over Q1–Q2 FY 2026-2027 — management's view is that margins have bottomed out, attributing the dip to sudden cost increases in phenolic resins and other oil-based products due to the war, with limited ability to pass on costs since these items are not stocked in large quantities.
• Historical abrasives margin trajectory of 15–16% — management aims to restore margins to ~15% (period unspecified) and is working on multiple areas to address the cost challenge.
• Q2 FY 2026-2027 oil-based input cost increases not yet passed through — management attributed this to a timing difference rather than competitive pressure and is working on pass-through, balancing the cost push against what the market can absorb given competition.
• Chinese import competition persists — management stated "there's nothing called we are out of it"; the situation is improving due to the export duty benefit withdrawal for Chinese companies plus a strong dollar and weak rupee making imports slightly unattractive; management expects inflows into India will probably slowly taper down.
• Export duty rebate withdrawal for Chinese companies — a topic management has discussed over the last 2-3 quarters, seen as a welcome step for Indian manufacturers; management separately noted general industrial activity itself is picking up well.

Awuko Closure Advancing; Rhodius Break-Even Targeted Q1 FY 2027-2028

• Awuko Abrasives closure progressing — following CUMI International Limited's board decision (intimated 30 March 2026), Q4 FY26 included Rs.119 cr of exceptionals; in October 2026 Awuko signed agreements to sell all PP&E and inventory for Rs.5.34 cr, with an additional Rs.18.3 cr exceptional recognized in Q2 FY27; final liquidation under German law is underway.
• No further loss expected on the German exit — management said the held-for-sale value (~Rs.16-17 cr vs the Rs.5 cr sale price) is based on an agreed contract and the money has already been received; management does not expect further write-offs for Awuko.
• Rhodius (Germany) loss narrowed to EUR 0.3 mn — sales EUR 14.5 mn (-16.8% YoY, a base effect from a Q1 FY26 transition shortfall of EUR 4-5 mn picked up in Q2 FY26); management now expects FY27 sales flat vs FY26 with a loss lower than FY26, versus prior guidance of ~5% FY27 growth with a small PAT-level loss.
• Rhodius break-even guided by Q1 FY 2027-2028 — followed by small profits building thereafter; a large improvement program is deployed with the local team and external management consultants; management does not believe there are any current write-offs/impairments.
• Foskor Zirconia (51% subsidiary) determined commercially unviable — FY26 accounts included a Rs.16 cr asset write-down; Q2 FY27 low-level operations (sales ZAR 53 mn, loss ZAR 24 mn); management realistically expects to complete the exit in Q3 FY 2026-2027 (the December quarter) rather than it prolonging into Q4 FY 2026-2027; the Awaco issue has been "reasonably addressed."
• Zirconia sourcing unaffected — the current zirconia facility is independent of the company's South Africa capability; management stated there is no disruption to established sources.

Semiconductor Components and AMB/DBC Substrates Anchor the New-Age Pipeline

• Rs.66 cr of capex already incurred for the semiconductor anchor customer — revenues begin picking up from FY28 (FY 2027-2028), and total investment could scale to 3x-4x of the amount already invested (period unspecified).
• Semiconductor equipment components top line could reach Rs.300-350 cr — management expects the peak around FY30 (FY 2029-2030), building progressively through FY30-FY31 (FY 2029-2030 to FY 2030-2031) as the expansion proceeds in phases.
• Electronic (metallized) substrates program to take at least another year — i.e., into FY 2027-2028, with required technology support secured, anchor-customer work and base-level works initiated; revenue potential to be shared at an appropriate time.
• AMB/DBC entry targets value-added substrates, not mere substrates alone — management cited capability built in metallized products over a couple of decades and a "reasonable right to win" after required testing and validation, against established Japanese and Chinese suppliers with significant scale and OEM qualifications cited by the analyst as the benchmark.
• New-area EBIT margins expected above the 20-21% baseline in a stable state — for semiconductor equipment components, electronic substrates and armor (period unspecified); initial-phase margins were not quantified, and no revenue potential was quantified for the Rs.50 cr armor line capex.
• Electro mineral mix shift continues — brown and white fused alumina constitute 85% of electro mineral segment revenue as of Q2 FY 2026-2027, with the portfolio being shifted toward treated, specialty and transformational products (including SOFC and semiconductor applications); treated products are value-add products serving the same abrasives and refractory industries.

FY27 Consolidated Growth Retained at 15%; Ceramics Raised, Abrasives Trimmed

• FY27 consolidated sales growth guidance retained at 15% — originally guided at 4-4.5% (11-12% excluding Foskor/Awuko revenue of Rs.343 cr in FY26), revised to 15% at the previous earnings call.
• FY27 ceramics guidance raised to 25-28% growth and 22.5-23.5% margin — from 23-25% growth and 20.5-21% margin; led by engineered ceramics, with Bloom Energy-related products and metallized cylinders cited as the two key growth vectors; ceramics exports typically run at 85%+, maintained in H1 FY 2026-2027.
• FY27 abrasives guidance retained at 5.5-6% growth, but margin trimmed to 8-8.5% (ex-Awuko) — below the earlier 9.5-10% guidance, reflecting the H1 FY27 standalone margin drop and cost pressures; FY26 reported abrasives margin was 4.3% (7.9% ex-Awuko loss).
• FY27 electrominerals guidance retained at 9-10% growth and 9-9.5% margin — originally a 6.5-7% decline on account of the Foskor closure; FY26 reported margin was 5.6% (9.1-9.5% excluding the Foskor Zirconia loss).
• FY27 consolidated capex guidance retained at Rs.400 cr — management indicated capex on track, closures of Awuko and Foskor Zirconia progressing well, and all Aspiration 2030 programs (capex, high-performance organization, R&D rejuvenation, manufacturing and sales excellence, digitization) being pursued well and on track; ESG compliance across all four businesses progressing very well.
• H1 FY 2026-2027 working capital absorbed ~Rs.250 cr, leaving operating cash flow of only ~Rs.25-26 cr — management expects this to reverse in H2 FY 2026-2027, driven by receivables collection of September sales and a normal inventory build for higher H2 growth; termed normal course with no concern.
• 2H FY 2026-2027 demand continuing well — ~15% growth at H1 FY 2026-2027 with industrial activity, construction and infrastructure-led demand all in a good state; refractory project orders currently "pretty strong," though the company stays out of consumable refractories and remains highly project-dependent, and the analyst noted listed refractory peers' growth momentum has not been encouraging with intensifying competition.