Carborundum (CRBR.BO, Buy, PT Rs 360, 23% upside) UBS: India Mid-Caps TOP PICKS - September 2011

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• Market leader in abrasives and ceramics
• CUMI strategy to increase focus on electro minerals (raw
materials for abrasives and ceramics, strategic and scarce
minerals used in high-end applications)
- 36%/40% of its revenue/EBIT in FY11
- higher margins (18%) and ROCE (32%)
- 4 new expansion projects
• 19% EPS CAGR over FY11-13E, 24% revenue CAGR and
higher margins. Higher capacity utilization in abrasives and
ceramics = ROCE back to 25%+
• Market Cap US$0.6bn, ADV < US Promoter 43%
• Valuation: 14x FY13E P/E, trading at discount of 20-28%
to peers (Grindwell Norton and AIA). Implied FY13E
EV/EBITDA of 8.5x


• 2nd-largest SiC producer in the world
• 3rd largest zirconia producer in world
• 3rd largest in metallised cylinders in world
• It makes up one-third of the coal washery
ceramics lining market in Australia.
• It is the leading player in India’s abrasives
market (a near oligopoly).




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