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Dolat Capital Report
Birla Corporation Ltd. reported results in line, however adjusted profit after tax below estimates.
Birla Corporation posted +9.3% YoY revenue to Rs 24.1 billion (-2.2% QoQ) led by +12.2% YoY/ -0.6% QoQ in volume to 4.4 million tonne, which was partially offset by -2.2% YoY/ -1% QoQ in realisation/tonne to Rs 5,229. Ebitda +14.9% YoY/ +8.6% QoQ to Rs 3 billion.
However, adjusted profit after tax declined by 18.8% YoY to Rs 59 million in Q1 FY24.
We like Birla Corp's focus on trade segment (76% share), increasing share of premium products (54% share in trade), higher share (88%) of high margin blended cement and sizable presence in relatively better regions of Central, North and West.
Improvement in profitability to continue as Mukutban utilisation improves and full benefit to be seen in FY25E.
To support the growth beyond FY23, Birla Corp will embark on the next phase of growth to enhance its capacity to 30 million tonne per annum by FY30E from 20.0 mtpa in FY23.
Thus, we maintain 'Buy' with a revised target price of Rs 1,479 based on 8.5 times (versus nine times five/ 10 year average.) consolidated FY25E enterprise value/Ebitda (versus eight times earlier) and 50% capital WIP of FY25E (our target price factors EV of $90/tonne).
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