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Strong volume growth, but earnings under pressure

Mukutban-powered volume growth, but lower realization

* BCORP’s 3QFY25 EBITDA declined 34% YoY to INR2.5b (7% miss, led by lower realization and higher variable cost/t vs. our estimate). Volume grew 7% YoY to 4.5mt (+4% vs. estimate). EBITDA/t declined 39% YoY to INR551 (-10% vs. estimate) and OPM contracted 5.4pp YoY to 11% (estimate ~12%). PAT declined 71% YoY (30% miss due to lower-than-estimated other income).

* Management highlighted that the lower realization was due to a change in the geographic mix as volume share from the Mukutban plant increased, where the cement price is lower than in the Northern and Central regions. Within regions, the North has outperformed, driven by better pricing, volume growth, and the advantages of its Chanderia plant in Rajasthan. However, it faced challenges in Central India, its core market, where intense competition led to pricing pressure.

* We cut our EBITDA estimates by 5% for FY25-27 (each) due to lower realization estimates. The EPS cut is higher, at 28%/13%/8% for FY25/FY26/ FY27, driven by lower EBITDA and other income. We value the stock at 9x Dec’26E EV/EBITDA to arrive at our revised TP of INR1,470 (earlier 1,580). Reiterate BUY.

Cement realization/t declines 10% YoY; opex/t down 3% YoY

* Consol. revenue/EBITDA/Adj. PAT stood at INR22.6b/INR2.5b/INR312m (-2% /-34%/-71% YoY and +3%/-7%/-30% vs. our estimates) in 3QFY25. Volume grew ~7% YoY to 4.5mt. Cement realization declined 10% YoY (-1% vs. est.).

* Opex/t declined 3% YoY (+1% vs. estimate), led by a 6%/1% decline in variable costs/other expenses. Freight cost/t was flat YoY. OPM contracted 5.4pp YoY to ~11% and EBITDA/t decreased 39% YoY to INR551. Interest costs declined 14% YoY, and other income declined 5%.

* In 9MFY25, consol. revenue/EBITDA/PAT declined 9%/29%/83% YoY. Volume was flat YoY and realization fell ~9% YoY. OPM contracted 3pp YoY to ~11% and EBITDA/t declined 30% YoY to INR532. We estimate revenue/EBITDA/ PAT to decline ~5%/28%/46% YoY in 4QFY25. Further, we estimate EBITDA/t at INR691 vs. INR974/INR551 in 4QFY24/3QFY25.

Highlights from the management commentary

* Management reiterated volume growth guidance of ~4% in FY25E and 7-8% in 2HFY25E and EBITDA/t improvement of INR150/t in 2H vs. 1HFY25.

* The Mukutban plant’s capacity utilization stood at +60% and is expected to increase further. This plant’s performance is improving QoQ and has started contributing positively to the company’s overall performance.

* It has started accruing incentives for the Mukutan plant and is expecting a total incentive accrual of INR1.0b in FY25 (with INR600m accrued in 9MFY25).

Valuation and view

* BCORP posted strong volume growth, benefiting from its favorable regional presence and steady growth at the Mukutban plant. However, due to a limited expansion plan and peak capacity utilization (at +90%), modest volume growth is expected in the medium term (~6% CAGR over FY25-27).

* BCORP trades inexpensively at 8x/7x FY26E/FY27E EV/EBITDA and USD58/ USD56 EV/T. We reiterate our BUY rating with a revised TP of INR1,470 (earlier INR1,580), based on 9x Dec’26E EV/EBITDA.

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