IGI Logo

Result Synopsis

Birla Corporation (BCORP) reported a strong set of numbers, where net profit rebounded to Rs850mn in Q4FY23 against net loss of Rs499mn in Q3FY23. This was guided by healthy EBITDA of Rs618/te coupled with higher other income (Rs491mn) and incentive accrued (Rs183mn) under exceptional items. BCORP reported all-time high revenue of Rs24.6bn (+9% y/y) aided by volume & NSR growth of +5% & 4% y/y in Q4FY23. During the quarter, premium products contributed 54% of trade sales which stood 77% of total sales. BCORP is focused to scale up coal production from captive mines to reduce the cost and dependence on imported fuels. In FY23, production from RCCPL's Sial Ghoghri mine reached 0.35MT (+72% y/y). Meanwhile, Bikram coal mine is expected to operationalize by Oct’23. Furthermore, the newly secured coal mine at Marki Barka (reserves of 70MT of G6 grade) in Oct’22, is expected to operationalize by FY25E.

BCORP plans various steps to improve efficiency: 1) Higher use of AFR by upgrading kilns, 2) Higher consumption from captive coal mines, 3) Consistently investing in WHRS/RE, accounts for 22% of total power consumed, 4) Higher blended/premium product push. We believe that volumes to grow at 12% CAGR over FY24?25E backed by the newly added 3.9MTPA at Mukutban coupled with strong demand momentum in its key markets (UP & MP). Mukutban unit incurred operating loss due to pending stabilization, which impacted the overall profitability. Going forward, we believe improved utilization & clinker factor coupled with cost effectiveness (WHRS/Railway siding/optimum fuel usage) will stabilize the operating performance for Mukutban units leading to overall margin accretion. Recent CAPEX along with weak operational profitability, peaked the Net Debt/EBITDA to 4.7x in FY23. We believe BCORP to generate OCF of Rs20bn over FY24-25E, tends to deleverage its B/S (Net Debt/EBITDA to 1.8x by FY25E). At CMP stock trades at 9/6x EV/EBITDA on FY24/25E. We maintain BUY rating with a TP of Rs1370, valuing the stock at 8x EV/EBITDA on the FY25E.

Result Highlights

* Volume came at 4.4MT (+4% above YSECe) up by 5% y/y and 19% q/q guided by ramp up of the newly added capacity at Mukutban.

* Despite weak pricing during the quarter, BCORP’s NSR grew by 4% y/y and 2% q/q to Rs5546/te (YSECe of Rs5365/te).

* As a result, Revenue came 7% above our est. to Rs24.6bn, registering a growth of 9% y/y and 22% q/q in Q4FY23.

* Delivered EBITDA of Rs2.7bn flat y/y and up by +90% q/q translated to an EBITDA margin of 11.1% (v/s 8.3% YSECe) in Q4FY23. EBITDA/te of Rs618 although declined by 5% y/y but increased by 59% q/q in Q4FY23.

* Reported a net profit of Rs850mn declined by 24% y/y in Q4FY23 while was higher against net loss of Rs499mn in Q3FY23

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