Elevated opex from collection infrastructure investments
Opex ratio increased to 3.7% due to investments in MSME sales and collection teams; if credit costs do not decline as expected, profitability could be pressured.
CARBORUNIV / bear-case history
Track the concerns that keep returning.
Carborundum Universal · risk themes across the available quarters.
Research layer active
Bear-case history
Risks carried through the record.
medium
Higher credit cost in intermediate retail segment
Credit cost in the intermediate retail segment was elevated due to prudent provisioning; analyst questioned sustainability, management cited management overlays.
Slowdown in fee-based business growth
Fee income was subdued at 6% of AUM due to cautious underwriting and slow credit demand; management expects improvement in H2 but risk of delayed recovery.
MFI portfolio stress despite CGFMU cover
MFI credit cost improved but remains elevated at 5.1%; reliance on CGFMU guarantee may not fully offset underlying asset quality risks.
Continued losses at AUKO and FOSCAR
AUKO and FOSCAR continue to incur losses, with AUKO's loss before tax widening to €2.7 million in Q3 FY26. Management is evaluating options, including potential divestment.
Project delays in US ceramics market
Ceramics growth is impacted by project delays in the US due to tariff uncertainty, leading to muted 9-month standalone growth of 1.7%.
VAW sanctions impact
VAW sales dropped 46% YoY due to US sanctions imposed in January 2025, with no clear timeline for resolution.
FOSCAR price pressure from Chinese competition
FOSCAR faces significant price pressure from Chinese competitors, with realizations down 13% despite volume growth of 22%.
Execution risk in new capacity ramp-ups
New facilities for semiconductor ceramics and thin wheels may take longer to achieve full utilization, delaying revenue contribution.
Geopolitical risk from Russian subsidiary VAW
VAW Russia continues to face sanctions, with sales down 35% in ruble terms. Management has no alternative strategy and is waiting for sanctions to lift.
Competition from Chinese imports in abrasives
Despite China removing export rebates, Chinese competition remains intense. Management noted that inventory in the system may delay benefits.
Deferred project risk in ceramics
Ceramic segment missed FY26 guidance due to deferred projects; similar delays could impact FY27 growth targets.