This abrasive manufacturing stock gave its investor 3.5x returns in two years!
Carborundum Universal Ltd is a part of S&P BSE 500.
Carborundum Universal Ltd shares were trading at Rs 204.55 on 23rd May 2020. Two years later, the scrip is trading at Rs 715, which means a return of 350% in last two years. Just to compare the returns, in this same period, S&P BSE 500 delivered a return of 76%. This means the company’s shares have generated return 4.6 times greater than its index.
Carborundum Universal Ltd is a company formed in 1954 by the collaborative efforts of three companies- Murugappa Group, The Carborundum Co USA, and the Universal Grinding Wheel Co Ltd U.K. The company is a pioneer in the manufacturing of coated abrasives and bonded abrasives. The company also manufactures super refractories, electrominerals, industrial ceramics, and ceramic fibres.
Electrominerals, abrasives, and ceramics contributed about 41%, 38%, and 24% to the revenue of Carborundum Universal Ltd, respectively for the period ending FY22. In the last two years, the company reported a growth of 28% for both revenue and the profit after tax numbers. For FY22, the company reported a revenue and PAT at Rs 3,325 crore and Rs 333 crore, respectively.
The company has an operating margin, ROE, and ROCE of 13.89%, 14.1% and 18.11%, respectively for the period ending FY22. It is trading at about 42 PE multiple.
For the quarter ended March 2022, the company has reported a total income of Rs 881.70 crore as compared to Rs 766.54 crore during the period ended March 31, 2021, showing a growth of 15.02%. In terms of bottomline, the company has posted a net profit of Rs 57.03 crore for the period ended March 31, 2022, as against a net profit of Rs 90.53 crore for the period ended March 31, 2021.
Carborundum Universal Ltd's investors not only enjoyed capital gains due to strong appreciation of stock but also received stock dividends of Rs 1.5 and Rs 2 per share in February 2022 and May 2022, respectively.
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