Motilal Oswal's research report on Birla Corporation
Birla Corporation (BCORP)’s 1QFY26 EBITDA increased ~34% YoY to INR3.5b (~8% miss due to lower-than-estimated realization). EBITDA/t was up ~23% YoY to INR725 (est. INR838), and OPM surged 2.3pp YoY to~14% (est. ~16%). PAT rose 3.7x YoY to INR1.2b (~11% below estimate due to higher ETR).
Management highlighted that profitability was adversely impacted by the extended shutdown at the Maihar and Mukutban plants, forcing BCORP to make clinker purchases from the market. This resulted in increased costs and a lower margin. Another factor was subdued pricing in the central region (a core market; BCORP sold ~50% of its volumes in this market). It is focusing on improving value share through premiumization and stronger brand positioning rather than chasing volume share. It is also focusing on its next phase of growth plan (both brownfield and greenfield expansions), targeting stronger performance going forward.
Outlook
We estimate BCORP’s revenue/EBITDA/PAT CAGR of ~8%/18%/33% over FY25-28. Estimate EBITDA/t at INR803/INR853/INR903 in FY26/FY27/FY28 vs. INR672 in FY25 (five-year average INR820). BCORP trades inexpensively at 8x/6x FY26E/FY27E EV/EBITDA and EV/t of USD60/USD57. We value the stock at 8x Jun’27E EV/EBITDA to arrive at our TP of INR1,700. Reiterate BUY.
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