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Our view and valuation:

* Birla Corp during the quarter delivered volume growth of 38.4% y/y to 3.35MT which was 18% higher than our estimates. Accordingly, capacity utilization for the company during the quarter stood at 90% (Q1FY21‐ 58% utilization). However, EBITDA was 14.2% above our estimates at Rs3.44bn which was up 47.4% y/y. Blended EBITDA/te came in at Rs1026 (cement EBITDA/te  ‐Rs1001) which declined by 6.5% y/y and was in‐line with our estimates.

* Company’s 4MTPA greenfield plant at Mukutban, Maharashtra has witnessed some bottlenecks in commissioning on account of second wave of COVID in Q4FY21 but now it’s running in full swing and management expects to complete the project by the end of FY22 post which total capacity of the company would increase to ~19.5MTPA.

* Going ahead, we kept our volume/EBITDA estimates unchanged and at CMP of Rs1,382, BCORP is trading at EV/EBITDA of ~7.2x on FY24E. We assign an EV/EBITDA multiple of 9x on FY24E and arrive at TP of Rs 1,830/share with potential upside of 32.4%. We maintain our BUY rating on the stock

Result Highlights:

* For quarter company delivered cement volumes of 3.35MT (‐19.7%QoQ/ 38.4%YoY). Reported net sales of Rs17.5bn (‐18%QoQ/43.1%YoY).

* Cement NSR/te came in at Rs4933/te translating in 343/bag on the back of better realisations and higher contribution from the premium cement (51% against 43% in Q1FY21). Non‐trade contributed 17% for the quarter.

* Capacity utilization for the quarter stood at 90% with 92% blended cement volumes.  

* Company delivered strong EBITDA of Rs3.44bn (‐12.4%QoQ/47.4%YoY) on the back higher net realization and lower clinker production. Operating margins came in at 19.6% (126bps QoQ/56bps YoY) and reported EBITDA/te at Rs1001/te.  

* Adjusted PAT for the quarter came in at Rs1.42bn (‐43.2%QoQ/115.2%YoY).  

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