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Healthy Q2; C&P led growth momentum intact

We revise our EPS estimates by +1.9%/+1.5% for FY28E/FY29E factoring in continued healthy growth momentum in the Ceramics and Plastics (C&P) division. GWN reported a healthy Q2FY27, with revenue growing 14.1% YoY and EBITDA margin expanding 68bps YoY to 18.8% driven by operating leverage, partially offset by lower gross margin due to higher material costs. Growth was led by the Ceramics & Plastics segment (+18.5% YoY), where EBIT margin expanded 178bps YoY, likely supported by a favourable mix of specialty, value-added products and traction across engineered ceramics, performance polymers and tape solutions. The Abrasives business also maintained healthy momentum (+15.1% YoY), with EBIT margin at 13.3%, likely benefiting from new product launches, digital initiatives, customer engagement and improved competitiveness against low-cost Chinese imports following the withdrawal of export rebates. The Digital Services segment grew 9.7% YoY, although EBIT margin contracted 269bps YoY to 23.1%. Further, continued development of applicationspecific products for high-growth end markets such as semiconductors, electric vehicles, aerospace, solar and biopharma is strengthening GWN’s solutions-led positioning. The ramp-up of recently commissioned capacities, further product development and localisation, and gradual scaling of exports to Europe and North America following customer qualifications are expected to support medium-term growth. However, input cost volatility and sustained competition from low-cost Chinese imports in select abrasive categories remain key monitorables. The stock is trading at a P/E of 37.3x/32.7x on FY28/29E earnings. We roll forward to Sep’28E and maintain our ‘Accumulate’ rating, valuing the stock at 40x Sep’28E (41x Mar28’E earlier) arriving at a TP of INR2,245 (INR2,113 earlier).

Long term: While supply chain disruptions and higher input cost arising amid geopolitical uncertainties remain key near-term monitorables, however we believe GWN's long-term 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.

Operating leverage supported profitability despite lower gross margin:

Consolidated revenue grew by 14.1% YoY to INR8.8bn (Ple: INR8.8bn). Gross margin contracted by 251bps YoY to 51.8%. EBITDA increased by 18.3% YoY to INR1.7bn (Ple: INR1.7bn). EBITDA margin expanded by 68bps YoY to 18.8% (Ple: 19.3%) driven by operating leverage. Adj. PBT came in at INR1.8bn (Ple: INR1.7bn) an increase of 23.7% YoY driven by higher other income (+27.4% YoY to INR395mn). Adj. PAT improved by 24.2% YoY to INR1.3bn (Ple: INR1.3bn).

Healthy growth across all segments: C&P revenue grew by 18.5% YoY to INR3.9bn, Abrasives grew by 15.1% YoY to INR4.2bn, and Digital Services revenue grew by 9.7% YoY to INR594mn. EBIT margin of C&P expanded by 178bps YoY to 19.2%, Abrasives declined expanded by 37bps YoY to 13.3%, while Digital Services declined by 269bps YoY to 23.1%.

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