Carborundum Universal Reports Profit Decline Due to Russian Subsidiary Impact

Carborundum Universal , a leading abrasives and ceramics manufacturer, has released its quarterly results, showing a mixed performance with revenue growth but a significant decline in profitability, largely attributed to its Russian subsidiary.

Financial Highlights

Metric	Q2 FY24	Q2 FY23	YoY Change
Revenue	12.98	12.24	6.05%
Net Profit	745.10	1.16	-35.77%
EBITDA	1.56	1.94	-19.59%
EBITDA Margin	12.05%	15.93%	-388 bps

Revenue Growth

Carborundum Universal reported a revenue increase to ₹12.98 billion in the quarter, up from ₹12.24 billion in the same period last year. This represents a year-over-year growth of 6.05%, indicating continued demand for the company's products.

Profitability Challenges

Despite the revenue growth, the company faced significant challenges in maintaining its profitability:

Net Profit Decline: The net profit for the quarter stood at ₹745.10 million, a substantial decrease from ₹1.16 billion in the previous year, marking a 35.77% decline.
EBITDA Compression: Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) decreased to ₹1.56 billion from ₹1.94 billion year-over-year.
Margin Pressure: The EBITDA margin compressed to 12.05% from 15.93% in the same quarter last year, a decrease of 388 basis points.

Impact of Russian Subsidiary

The company attributed the decline in profits primarily to lower earnings from its Russian subsidiary. This subsidiary has been significantly affected by sanctions, which have impacted its performance and contribution to the overall group's profitability.

Outlook

The decline in profitability metrics, particularly due to the challenges faced by the Russian subsidiary, presents a complex situation for Carborundum Universal. While the company has managed to grow its revenue, the impact of geopolitical factors on its international operations has clearly taken a toll on its bottom line.

Investors and analysts may focus on several key areas:

The company's strategies to mitigate the impact of sanctions on its Russian operations.
Plans to improve profitability in other segments to offset the losses from the affected subsidiary.
Potential restructuring or strategic changes to adapt to the current geopolitical climate.
Efforts to maintain revenue growth while addressing the profitability challenges.

Carborundum Universal's management may need to address these concerns and provide a clear roadmap for navigating the current challenges to restore investor confidence in the company's long-term prospects.

1 Day	5 Days	1 Month	6 Months	1 Year	5 Years
-2.68%	+0.36%	-2.61%	-11.91%	-34.70%	+205.10%

Carborundum Universal Limited (CUL) has taken a significant step in restructuring its shareholder categories. The company has applied to both the National Stock Exchange of India Limited (NSE) and BSE Limited for the reclassification of two entities from its 'Promoter Group' to the 'Public' category.

Entities Involved in Reclassification

The two entities seeking reclassification are:

Coromandel Engineering Company Limited (CECL)
Yanmar Coromandel Agrisolutions Private Limited (YCAS)

Timeline of Events

The process of reclassification has been ongoing, with CUL making several intimations to the stock exchanges:

Date	Event
August 29, 2025	Initial intimation
September 17, 2025	Follow-up intimation
October 8, 2025	Further update
October 13, 2025	Application submitted to NSE and BSE

Regulatory Compliance

The reclassification application is being processed in accordance with Regulation 31A of the Securities and Exchange Board of India (SEBI) Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015, as amended. This move follows requests from CECL and YCAS, referred to as the 'Outgoing Members of the Promoter Group' in the company's official communication.

Implications

This reclassification, if approved, could potentially alter the shareholding structure of Carborundum Universal Limited. It may impact the way these entities' holdings are perceived in the market, as they would no longer be considered part of the promoter group.

Next Steps

The stock exchanges will review the application, and their decision will determine the future classification of CECL and YCAS. Shareholders and potential investors should keep an eye on further announcements regarding the outcome of this application.

Carborundum Universal Limited has requested the stock exchanges to take this information on record. As the process unfolds, it will be crucial to monitor any changes in the company's shareholding pattern and its potential effects on the stock's performance.