Buy Birla Corporation Ltd for the Target Rs. 1,490 by Choice Institutional Equities
Key Conference Call Highlights
Conservative FY27 outlook amid uncertainty
* Management remains cautious due to global macro and geopolitical uncertainties.
* FY27 volume growth expected in the mid-single-digit range
* EBITDA in FY27 is likely to remain broadly similar to FY26 levels despite cost pressures
INR 45 Bn expansion program underway
* Capacity expansion from 21.5 MTPA to 27.5 MTPA by FY29
* Total investment outlay stands at ~INR 45 Bn. FY27 capex guidance at INR 9 Bn
New capacity pipeline
* Prayagraj Grinding Unit (1.4 MTPA) expected in Q3/Q4FY28
* Gaya Phase-I Grinding Unit (1.4 MTPA) expected in Q3/Q4FY28
* The entire expansion program is scheduled for commissioning by FY29
Cost inflation remains a major headwind
* Management expects INR150–175/t cost inflation from Q1FY27. Inflation is driven primarily by packaging costs and fuel prices
* Rising domestic fuel costs are adding pressure despite lower imported fuel dependence
Premiumisation strategy continues to deliver
* Premium flagship brand Perfect Plus now has a strong footprint across North and Central India
* Management highlighted that pricing in core markets is now at par or even higher than several larger peers
Debt to rise but leverage remains comfortable
* Peak net debt expected to reach around INR 40 Bn
* Management guided that Net Debt/EBITDA will remain below 2.5x despite the ongoing expansion cycle
Incentives and cash inflows
* FY27 incentives expected at approximately INR 1,300 Mn
* Around INR 5,000 Mn of incentive receivables are expected to start getting realised from FY27 onward
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SEBI Registration no.: INZ 000160131
