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Healthy Q1; C&P to anchor growth momentum

We revise our EPS estimates by +3.9%/+3.0% for FY27E/FY28E factoring in continued healthy growth momentum in the Ceramics and Plastics (C&P) division. GWN reported a healthy Q1FY27 with revenue growth of 14.2% YoY and EBITDA margin expansion of 108bps YoY to 19.5%, likely supported by a favorable product mix, operating leverage and the ramp-up of capacities. Growth was led by the Ceramics & Plastics segment (+18.8% YoY), where a richer mix of specialty and value-added products likely supported a 377bps expansion in EBIT margin. The Abrasives business also maintained healthy momentum (+10.0% YoY), likely benefiting from product innovation, market share gains and improved competitiveness due to elevated landed costs of Chinese imports, while sustaining an EBIT margin of 12.7%. GWN continues to strengthen its solutions-led business through sustained investments across Abrasives, Ceramics and Performance Polymer Solutions, backed by capacity expansion and a differentiated product portfolio focused on high-growth end markets. These investments, coupled with improving utilization of recently commissioned capacities, continued new product development and a gradual recovery in exports to Europe and North America, are expected to support growth over the medium term. However, input cost volatility arising from geopolitical uncertainties and Chinese competition in select abrasive categories remain key monitorables. The stock is trading at a P/E of 44.8x/39.2x on FY27/28E earnings. We maintain our ‘Accumulate’ rating valuing the stock at a PE of 41x Mar’28E (40x Mar’28E earlier) arriving at a TP of INR2,113 (INR2,002 earlier).

While supply chain disruptions and higher input cost arising amid geopolitical uncertainties remain key near-term monitorables, however we believe GWN's longterm prospects driven by

(1) continuous new product development across businesses

(2) increasing exposure to high-growth sectors such as semiconductors, EVs, electronics, aerospace and life sciences

(3) expansion in specialty Ceramics, Refractories and PPS offerings

(4) benefits from recent capacity additions across abrasives, engineered ceramics and life sciences.

Higher gross margin and operating leverage aided profitability:

Consolidated revenue grew by 14.2% YoY to Rs8.0bn (Ple: Rs7.8bn). Gross margin expanded by 43bps YoY to 55.0%. EBITDA increased by 20.9% YoY to Rs1.6bn (Ple: Rs1.5bn). EBITDA margin expanded by 108bps YoY to 19.5% driven by higher gross margin and operating leverage. Adj. PBT came in at Rs1.5bn an increase of 22.3% YoY. Adj. PAT improved by 22.3% YoY to Rs1.2bn (Ple:Rs1.1bn).

Healthy growth across all segments:

C&P revenue grew by 18.8% YoY to INR3.5bn, Abrasives grew by 10.0% YoY to INR3.9bn, and Digital Services revenue grew by 15.5% YoY to INR588mn. EBIT margin of C&P expanded by 377bps YoY to 21.2%, Abrasives declined marginally by 18bps YoY to 12.7%, while Digital Services declined by 411bps YoY to 24.0%.

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