Grindwell Norton (GNO) - Initiating coverage Report

We initiate coverage on GNO with a BUY. GNO combines a strong Saint-Gobainbacked competitive franchise with a broad abrasives portfolio, deep technology access and pricing discipline. The core abrasives business offers a structural mid-tohigh single digit growth trajectory, supported by steel, automotive, foundry and forging demand, while performance polymers and premium ceramics provide highermargin growth and mix-upside. Recent performance also benefits from the FY22–24 capex incurred, new products and cleaner export conditions. Importantly, China competition could ease following the withdrawal of export rebates. With continued investment in automation, productivity and value-added products, GNO is wellpositioned to sustain growth while improving mix and profitability.

Strong competitive franchise with technology-led differentiation:

GNO’s full-range abrasives portfolio, spanning bonded, coated, thin wheels, super abrasives and nonwovens, gives it exposure across a broad industrial customer base and is a key differentiator versus more specialized players. This is reinforced by sustained access to Saint-Gobain’s global technology, R&D and application expertise, supporting product development and customer stickiness. The company’s high local manufacturing content and ability to pass through input-cost inflation further strengthen the franchise.

Structural growth with multiple earnings drivers:

The core abrasives business has historically delivered ~6–8% normalized long-term growth, with demand linked to steel, auto, foundry and forging. Growth is increasingly complemented by highermargin performance polymers and ceramics (~15% CAGR over FY19-26), through which the company offers specialized applications across automotive, pharma, biopharma, and semiconductors. Rising contributions from these businesses could drive mix-led margin expansion, while rising demand from aerospace, defense, railways and semiconductors provide longer-term optionality.

Favorable competitive dynamics and capex benefits underpin growth

Recent performance reflects benefits from GNO’s FY22–24 capacity and productivity investments, while China competition could ease following the withdrawal of export rebates and subsequent price increases. GNO continues to invest 3–4% of turnover in automation, productivity, quality and value-added products rather than simply adding capacity. This combination of capability investments, pricing discipline and potentially easing Chinese competition provides a favorable backdrop for sustained growth and profitability.

Valuation and view:

We value GNO on a sum-of-the-parts basis, blending P/E and EV/EBITDA on the core business with a separately valued stake in unlisted SaintGobain India Pvt Ltd, arriving at a Sept-2028E base-case target price of Rs 2,371, 24% upside from CMP. Our estimates indicate a FY26-29E revenue/EBITDA/PAT CAGR of
10.3%/11.7%/12.1%.

Company website: https://www.grindwellnorton.co.in/

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Analyst:

• Mohit Surana - Senior Research Analyst, Institutional Equities (NISM-202300189881)
• Akhil Khanvilkar - Research Associate, Institutional Equities (NISM-202500193256)

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FAQs on Grindwell Norton (GNO) - Initiating Coverage Report

Grindwell Norton (GNO) is a diversified abrasives and advanced materials company with exposure to core abrasives, super abrasives, performance polymers and ceramics. Its technology relationship with Saint-Gobain, industrial customer base, productivity investments and premiumisation opportunities are key themes in the company's growth outlook.

What does Grindwell Norton do?

Grindwell Norton manufactures and markets a broad range of abrasives, including bonded abrasives, coated abrasives, thin wheels, super abrasives and nonwovens. It also operates in performance polymers and ceramics, serving industrial and specialized applications.

What are the key growth drivers for Grindwell Norton?

Key growth drivers include demand from steel, automotive, foundry and forging industries, alongside increasing opportunities in aerospace, defence, railways and semiconductors. Performance polymers and premium ceramics provide additional exposure to higher-value applications.

How does Saint-Gobain support Grindwell Norton?

Grindwell Norton benefits from access to Saint-Gobain's global technology,research and development capabilities and application expertise. This relationship can support product development, technical differentiation and customer engagement across specialized industrial applications.

What is the role of premiumisation in GNO's growth?

Premiumisation involves increasing the contribution of higher-value and technically differentiated products. For GNO, performance polymers and ceramics serve specialized applications across industries such as automotive, pharmaceuticals, biopharmaceuticals and semiconductors, potentially supporting a stronger product mix.

How important is the core abrasives business to GNO?

Core abrasives remain an important part of GNO's business and are linked to industrial activity in sectors such as steel, automotive, foundry and forging. The research report describes normalized long-term growth for the business in the mid-to-high single-digit range.

How could Chinese competition affect Grindwell Norton?

Changes in Chinese export rebates and subsequent pricing could influence competitive intensity in international abrasives markets. The research report identifies potentially easing Chinese competition as one factor that could support GNO's competitive environment.

What investments is Grindwell Norton making?

GNO has invested in capacity and productivity, particularly during FY22–24. The company also continues to invest in automation, productivity, quality and value-added products, with the research report indicating investment of approximately 3–4% of turnover across these areas.

What is the reported target price for Grindwell Norton?

The research report's stated base-case target price for Grindwell Norton is ₹2,371, based on September 2028E assumptions. The valuation uses a sum-of-the-parts methodology incorporating P/E and EV/EBITDA for the core business and a separate valuation for the company's stake in Saint-Gobain India Pvt. Ltd.

What are the risks associated with Grindwell Norton?

Relevant risks include weaker industrial demand, increased competition, adverse changes in input costs, slower adoption of higher-value products, execution risks related to investments and changes in global trade dynamics, including Chinese pricing and export policies.

What are the reported FY26–FY29E growth estimates for GNO?

The research report estimates FY26–FY29E revenue, EBITDA and PAT CAGR of 10.3%, 11.7% and 12.1%, respectively. These are analyst estimates and are subject to business, industry, macroeconomic and execution risks.

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