IGI Logo

In-line Margins; Volume led outperformance

Result Synopsis

Birla Corporation (BCORP) reported in-line EBITDA margin of 12%, While strong sequential volume & NSR growth (+27% & +2%) translate in revenue beat of +9% to YSEC est. to Rs22.6bn in Q4FY22. For FY22, BCORP posted a record volume of 14.2MT (+6% y/y; YSEC est. 14MT) resulting in +10% revenue growth (+3% higher than YSEC est.), however EBITDA decline by 13% y/y as operating cost surged by +19% y/y in FY22. BCORP total cement capacity reached to 19.4MTPA (+26%) in FY22 with the commissioning of Mukutban capacity. We modelled +23/9% volume growth in FY23/24E backed by capacity addition. The inflated fuel/diesel cost eroded the EBITDA/te to Rs781 (v/s YSEC est. 776) for FY22, but sequential price hikes and anticipated cost normalization should result in margin improvement over FY22. We trimmed our EBITDA/PAT est. by 6/12% for FY23E, while we kept FY24E flat as expects cost to get normalize going forward. Recent CAPEX peaked the Net Debt/EBITDA to 3.3x in FY22, while we believe BCORP to generate healthy operating cash flow of Rs22bn over FY23- 24E which would further help to deleverage its B/S and lower the Net Debt/EBITDA to 1.7x by FY24E. Thus, we retain our BUY recommendation with a TP of Rs1732 (earlier Rs1830), valuing the stock at 9x EV/EBITDA on the FY24 estimates.

Result Highlights

▪ Reported volume growth of +27% q/q and +2% y/y to 4.2MT against YSEC est. of 4MT and NSR grew by +2% q/q and +4% y/y against YSEC est. flat q/q translated in the revenue beat of +9% to YSEC est. to Rs22.6bn (+29% q/q and +6% y/y) in Q4FY22.

▪ Healthy topline and elevated other income (+9x q/q) led EBITDA/PAT grew by +24/83% q/q, while remained lower by 29/55% on y/y basis in Q4FY22.

▪ Despite, the sequential decline in power cost by 23% (+25% y/y), the surge in RM cost/te by +118% q/q (+22% y/y) had impacted EBITDA/te by 2% q/q to Rs653 (-30% y/y) v/s YSEC est. to Rs626/te in Q4FY22.

▪ In FY22, Volume grew by +6% y/y with the NSR increase of +4% y/y translated in reported revenue jump by +10 % y/y to Rs74.6bn (+3% higher than YSEC est.) in Q4FY22.

▪ EBITDA/PAT decline by 19/37% y/y to Rs11.1/3.9bn led by jump in total cost by +19% y/y, whereas EBITDA/te decline by Rs243 y/y (decline by 24% y/y) to Rs781 v/s YSEC est. of Rs776 in FY22.

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://yesinvest.in/privacy_policy_disclaimers
SEBI Registration number is INZ000185632

Above views are of the author and not of the website kindly read disclaimer