Grindwell Norton’s Fundamental Analysis – Future Plans & More

Grindwell Norton’s fundamental analysis: Manufacturing is an important pillar of national economic growth. This is thanks to the success of important industries such as automotive, engineering, chemicals, pharmaceuticals, and consumer durables. However, there is one key machine that is very essential to the manufacturing and engineering industry. These are called abrasives.

Abrasives are used to grind, polish, and sand materials. Abrasives contain sharp particles that use friction to shape wood, metal, and other materials. In this article, we will look at fundamental analysis of abrasives manufacturer Grindwell Norton, including its future plans, financials, and key indicators.

Grindwell Norton Fundamental Analysis – Company Overview

Grindwell Norton(GNO), founded in 1941, is a leading manufacturer of grinding wheels, abrasives, ceramics and plastics. GNO joined the Saint-Gobain group, a global leader in sustainable and lightweight construction, in 1990.

Currently, under this partnership, Saint-Gobain Group holds 51.66% of the equity capital of Grindwell Norton Ltd. Additionally, GNO is currently the headquarters of Saint-Gobain India and the IT development center in India for the Saint-Gobain Group globally.

Grindwell Norton is mainly a grinding wheel manufacturer, so let’s find out what a grinding wheel is. These wheels are used to remove material using friction and abrasion. These wheels are commonly used in several industries, including manufacturing, construction, and metalworking.

In addition to grinding wheels, Grindwell Norton is also involved in manufacturing ceramics and plastics. The High Performance Ceramics and Refractories business is part of Saint Gobain’s Ceramic Materials segment. This division provides complete solutions for the design, engineering and product manufacturing of refractory systems for high-temperature applications, ballistic applications and wear applications.

High-performance, quality products are made by the Performance Plastics Business. These include properties that make plastics resistant to temperature, friction, chemical, optical and weather.

In addition to manufacturing products, the company also provides full-scale architectural solutions for residential and commercial spaces. This includes providing screens on doors, windows, pools and patios to keep insects and mosquitoes out. The Performance Plastics division offers a variety of solutions for the automotive and residential markets.

Grindwell Norton’s Fundamental Analysis – Industry Overview

FY23 brought challenges across the world, including economic, layoffs, war, and environmental crises. As soon as the world recovered from the pandemic, war broke out in Ukraine in February 2022. Prices of raw materials, food, energy and fertilizers have soared.

As inflation rates accelerated, central banks responded with tight monetary policy to curb inflation. The negative impacts of rising import costs, currency depreciation, rising cost of living, and a strong dollar have left many developing countries experiencing extreme economic hardship.

The global economy grew by 3.4% in 2022 and is expected to grow by 2.8% in 2023, then show a moderate rise and settle at 3%. The Indian economy has rebounded strongly, helped by continued recovery in domestic demand, government infrastructure spending and increased exports. Furthermore ‘china plus one‘The strategy has promoted India as a global supplier by many international companies.

The annual inflation rate is below 6%, with the average inflation rate expected to be 5.2% in FY24, according to the World Bank. Exports of goods and services increased by 16% in the first nine months of the fiscal year (April to December) compared to the same period in 2021-22.

India’s current growth remains resilient despite some signs of easing. Overall growth remains strong and is estimated to be between 6.5% and 7% for the full year. Strong investment activity and robust private consumption, driven by the government’s capital spending drive, laid the foundation for growth.

that much industrial production index(“IIP”) grew 5.5% during 2021-22 and the growth was broad-based. Global geopolitical turmoil has led to rising raw material and input costs, leading to higher inflation and a depreciation of the rupee against the US dollar.

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Fundamental Analysis by Grindwell Norton – Financials

Sales and Net Profit

In FY23, Grindwell reported total revenue of Rs. 2541 Cr, an increase of 26% from Rs. Revenue growth in 2013 has only increased in the last two years after being stagnant during FY19-FY21. With strong double-digit growth over the past two years, Grindwell has achieved revenue growth of 12.3% CAGR since FY19.

Although the company’s revenue has grown over the past two years, its net income has remained somewhat constant. Net profit in FY23 increased by 23% from Rs. 295 Cr in FY22 to Rs. 362 Cr in FY23.

profit

The company’s operating profit margin was reported at 21.39% in FY23. These margins remained at around 20% and increased to the highest OPM of 22.21% in FY21. OPM is slowly increasing due to reduction in manufacturing costs.

Over the past five years, the company’s net profit margin has exceeded 10%. Grindwell maintained a net profit margin of 13.9% in FY23, down from Rs. It is 14.28% in FY22. Over the past 5 years. Grinwell maintained NPM at 12.8%.

rate of return

Due to higher profits, return on equity improved from 20.17% in FY22 to a five-year high of 21.47% in FY23. After FY21, the company’s five-year average remains at 18.53%.

Return on capital employed surged from 21.15% in FY22 to 24.65% in FY23. Due to fairly low debt, the company has successfully maintained ROCE at a five-year average of 23%.

debt analysis

The company has virtually no debt, with a debt-to-equity ratio of only 0.02x. Debt ratio increased slightly from 0.01x in FY22 to 0.02x in FY23 due to a slight increase in short-term borrowings.

Grindwell Norton’s interest coverage ratio is 63.29x in FY23 and the 5-year average is 96.81x. As it is a virtually debt-free company, the interest coverage ratio is very minimal.

Grindwell Norton’s Fundamental Analysis – What’s Next?

1. The company expects strong demand from the electric vehicle segment to drive demand for Grindwell’s composites business.
2. The High Performance Plastics business will strengthen our position in existing markets while accelerating our entry into new markets in industrial, life sciences and construction.
3. In the high-performance ceramics segment, the company is expanding its Halol operations in Gujarat.

Grindwell Norton’s Fundamental Analysis – Key Indicators

key indicators Grindwell Norton They are listed below.

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conclusion

In the conclusion of the article on the fundamental analysis of Grindwell Norton, we note that Grindwell Norton is a leading manufacturer of grinding wheels, abrasives, ceramics and plastics. The company is a subsidiary of the Saint-Gobain Group. The company delivered strong financial performance in FY23, with revenue growing 26% to Rs. 2541 Cr and net profit increased by 23% to Rs. 36.2 billion.

Grindwell Norton has maintained a healthy profit margin of around 20% and boasts strong returns, including return on equity of 21.47% and return on equity of 24.65% in FY23. In particular, the company has virtually no debt. debt ratio It’s only 0.02x.

Grindwell Norton expects robust demand from the electric vehicle segment to drive its composites business going forward. The company is also expanding its presence in existing and new markets for high-performance plastics and expanding its capabilities in the high-performance ceramics segment.

With strong financials, a diverse product portfolio and strategic growth initiatives, Grindwell Norton is well positioned for future growth, particularly in emerging sectors such as electric vehicles and construction.

Written by Nasir Hussein

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