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Near-term cost pressure delays recovery; structural growth levers keep outlook intact

We retain our ‘BUY’ rating on BCORP and revise our target price to INR 1,125/share, reflecting a 5.5%/3.3% reduction in our FY27E/FY28E PAT estimate. The earnings revision primarily factors in a slower-thananticipated margin recovery amid persistent fuel-cost inflation and continued pricing pressure in BCORP's key Central India markets.

The near-term operating environment remains challenging. The management has indicated a further ~INR 100/t QoQ increase in fuel cost in Q3FY27, which is likely to keep cost pressure elevated. While recent cement price hike of ~INR 5–7/bag could partly mitigate the impact, the ability to sustain further price increases will depend on the pace of demand recovery. Accordingly, we expect profitability to improve gradually over the coming quarters and estimate FY27E EBITDA/t at ~INR 661/t.

However, we remain constructive on BCORP's medium-term prospects. Increasing captive coal usage, renewable energy penetration and alternative fuel initiative should progressively ease cost pressure. Further, the planned 6.2 Mnt capacity expansion by FY29E provides a clear runway for volume growth, which is projected to expand at a 6.0% CAGR over FY26–FY29E. The company's continued focus on premiumisation and improving its market mix should also support realisations and drive a gradual improvement in profitability.

We believe the current earnings weakness is cyclical, while BCORP's key structural growth levers remain firmly intact. We expect EBITDA to expand at an 8.0% CAGR over FY26–FY29E, supported by volume growth of 4.0%/6.0%/8.0% and realisation growth of 3.0%/1.0%/0.5% across FY27E/FY28E/FY29E, respectively. At the current valuation of 5.6x FY28E EV/EBITDA, we believe the stock adequately factors in near-term challenges, while the medium-term growth potential remains underappreciated. This offers a favourable riskreward proposition, supporting our revised TP of INR 1,125/share, but retaining our ‘BUY’ rating

Q2FY27 result: Healthy volume and utilisation, but input cost surge weighs on profitability

BCORP reported Q2FY27 consolidated revenue and EBITDA of INR 24,154 Mn (+9.5% YoY, -8.7% QoQ) and INR 2,278 Mn (-25.3% YoY, - 33.4% QoQ) vs CIE estimate of INR 23,152 Mn and INR 2,234 Mn, respectively. Total volume for Q2 stood at 4.5 Mnt (vs CIE estimate of 4.5 Mnt), up 6.8% YoY and down 10.1% QoQ.

Blended Realisation/t came in at INR 5,320/t (+2.5% YoY and +1.5% QoQ), which is higher than the CIE estimate of INR 5,188/t. Total cost/t came in at INR 4,819/t (+7.7% YoY and +5.6% QoQ). As a result, EBITDA/t came in at INR 502/t (vs CIE estimate of INR 501/t), down ~INR 216/t YoY.

Key Risks:

Geopolitical volatility risk: Possible prolonged geopolitical disruption could increase petcoke prices, raising input cost and pressuring margin.

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