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Birla Corporation consolidated Q4FY24 volumes came at INR4.8mnt, up 15.5% QoQ and 9.2% YoY, leading to INR26,564mn in revenues (in line with our estimates), up 14.9% QoQ and 7.9% YoY. However, Company management is expecting Q1 and Q2 to remain soft on account of election and monsoon season. For the full year FY24 consolidated volume came at INR17.6mnt, up 12.3% YoY. Company reported full year consolidated revenue at INR96,627mn, up 11.3% YoY. Birla Corp had achieved 89% utilization for FY24 vs 81% for FY23. EBITDA/t for the quarter came at INR974/t, up 8.1% QoQ and 57.6% YoY. The YoY spike in EBITDA/t was mainly led by lower power and fuel cost, down 15.4% YoY. PAT for FY24 stood at INR4,202mn vs INR405mn in FY23. EPS for the full year was INR54.6.

Expansion Plan: The management has set a Capex of INR 8,000mn for FY25E, with INR 2,000mn earmarked for the development of coal mines and another INR 2,000mn for the Kundalgunj expansion for which management has approved the investment to augment the capacity by 1.4mnt. Furthermore, approval has been granted for the construction of a new grinding unit in Payagraj, Uttar Pradesh, with a capacity of 1.4mnt, slated to commence production by Q4FY25E. Additionally, a phase 2 expansion of the clinker line at Maihar is planned to begin in FY27E, aiming to double the capacity from 10,000 TPD to 20,000 TPD. There are also plans for additional grinding units in Bihar and Uttar Pradesh, along with one anticipated in the western region. The company aims to achieve a cement production capacity of 25mnt by FY26E.

Project Shikhar & Unnati: The Company has implemented various strategies to boost revenue and streamline costs, leading to notable advancements in premiumization, optimizing geographical mix, refining logistics, and reducing power and fuel expenses. These efforts, namely Project Shikhar for manufacturing operations and Project Unnati for sales, logistics, and marketing operations, have yielded substantial savings of approximately INR660mn and INR1,000mn, respectively, over the entire year. Both Project Shikhar and Project Unnati are ongoing initiatives, expected to drive continued enhancements in efficiency and cost savings.

Total cost dropped to INR4,503/t: In Q4FY24, the total cost per ton decreased by 2.2% QoQ and 8.6% YoY. The power and fuel cost per ton amounted to INR1,000/t, marking an 8.7% decrease QoQ and a 22.6% decrease YoY. This reduction in fuel cost is primarily attributed to lower power and fuel expenses and a shift in fuel composition. Freight and handling expenses were recorded at INR1,284/t, reflecting a 3.1% decrease QoQ and a 4.2% decrease YoY. The decrease in freight expenses is chiefly driven by a decline in lead distance, which stood at 349kms for the quarter, inclusive of both rail and road transport. The company aims to further reduce lead distance as part of its ongoing efforts.

View & Valuation: The cement demand in Q1FY25 is anticipated to be affected by the general elections and intense summer weather conditions nationwide. Traditionally, the Q2 experiences reduced demand due to the monsoon season. The Company will persist in enhancing operations at the Mukutban facility, particularly targeting the Maharashtra market to capitalize on tax incentives. The focus remains on expanding the market share of premium products in Maharashtra, Gujarat, and Rajasthan, where there is ample potential for growth. Furthermore, management has given the guidance to increase EBITDA/t by 8- 10% in FY25E. We expect Revenue/EBITDA to grow at a CAGR of 11.5%/15.0% respectively over FY24-FY26E. Our target EV/EBITDA multiple is 9x (unchanged) on FY26E EBITDA, hence we ascribe a target price of INR1,745, maintaining our rating to BUY.

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