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Robust Volume Growth; Margin Improvement Gradual

Est. Vs. Actual for Q3FY25: Revenue – BEAT; EBITDA Margin – MISS; PAT – MISS

Change in Estimates post Q3FY25 (Abs.)

FY25E/FY26E: Revenue: -1%/-2%; EBITDA: -7%/-3%; PAT: -11%/-6%

Recommendation Rationale

• Volume growth: During the quarter, the company experienced a 7% improvement in volume to 5.4 mtpa YoY, achieving a 92% capacity utilisation rate. The company’s performance was led by the Chanderia unit, which benefited from higher traction in demand and prices in northern India. The company aims to grow its volume at 7-8% in H2FY25. We pencil in volume growth CAGR of 7% over FY24-26E.

• Gradual increase in EBITDA/tonne: During the quarter, EBITDA/tonne improved by Rs 105/tonne. Management expects EBITDA/tonne to improve further by Rs 150- 170/tonne in Q4FY25 due to better demand, higher prices, and operating leverage benefits. Current prices are higher than Q3FY25 exit prices and are expected sustain, subject to higher demand. Consequently, we pencil in EBITDA/tonne growth of 26% in FY26 over FY25 at Rs 730/tonne.

• Robust cement demand in the country: Cement demand in the country is expected to remain robust, driven by increased capital spending by the central government on roads, railways, housing, and strong real estate demand. Rising investment in infrastructure development is anticipated to act as a catalyst for higher cement demand. The industry is projected to grow at a 7-8% CAGR during FY24- 26E.

Sector Outlook: Positive

Company Outlook & Guidance: The company has guided for an improvement in EBITDA/tonne by Rs 170/tonne in Q4FY25 and expects volume growth of 8-9% for the same period. Full-year volume guidance stands at 3-4%. The company will continue ramping up Mukutban operations, specifically focusing on the Maharashtra market to capitalise on tax incentives. Pricing is expected to remain dynamic, reflecting ongoing market conditions.

Current Valuation: 9x FY26E EV/EBITDA (Earlier Valuation: 9x FY26E EV/EBITDA)

Current TP: Rs 1,340/share (Earlier TP: Rs 1,390/share

Recommendation: We maintain our BUY recommendation on the stock

Alternative BUY Ideas from our Sector Coverage: UltraTech Cement Ltd (TP13,510/share), Dalmia Bharat (TP-2,000/share), Ambuja Cements (TP-655/share), JK Cement (TP-Rs 5,380/share), ACC Ltd (TP-2380/share), Shree Cement (TP30,000/share)

Financial Performance

BCL reported mixed numbers, with volume and revenue exceeding expectations, while EBITDA and PAT fell short. The company’s volume and revenue grew by 2% each against our expectations. Blended EBITDA declined by 40% YoY to Rs 248 Cr, falling short of expectations, while the company reported a profit of Rs 31 Cr compared to Rs 109 Cr in the previous year.

Notably, the company’s cost/tonne decreased by 3% YoY and remained largely flat QoQ at Rs 4,464/tonne. BCL’s EBITDA/tonne stood at Rs 551, down 39% YoY but higher by 23% QoQ. The company reported an EBITDA margin of 11%, compared to an estimated 12% and 16.4% YoY. Sales volumes for the quarter increased by 7% YoY to 4.5 mntpa. Blended realisation stood at Rs 5,015 per tonne, down 9% YoY but higher by 2% QoQ

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