Company Update : Birla Corporation by Motilal Oswal Financial Services Ltd
Performance below estimates on weak cement realization
* Birla Corporation’s (BCORP) 1QFY26 performance was below our estimates due to lower-than-estimated cement realization (~5% miss). EBITDA increased ~34% YoY to INR3.5b (~8% below our estimates and ~17% below consensus). OPM expanded 2.3pp YoY (dipped 4.8pp QoQ) to ~14% (est. ~16%). EBITDA/t increased ~23% YoY to INR725 (est. INR838). PAT surged 3.7x YoY to INR1.2b (~11% below our estimate due to higher ETR at 32.6% vs. our estimate of 27.5%).
* During the quarter, the company witnessed mixed regional trends, with strong demand and improved pricing in the western and eastern markets, while the central and north regions remained subdued. Profitability was partly impacted by extended maintenance shutdown, resulting in clinker purchases from third parties (clinker production declined ~17% YoY to 2.44mt; clinker capacity utilization stood at ~75% vs. ~91% in 1QFY25).
Volumes rise 9% YoY; EBITDA/t at INR725 (estimate INR838)
* Consol. revenue/EBITDA/Adj. PAT stood at INR24.5b/INR3.5b/INR1.2b (up 12%/34%/3.7x YoY and +1%/-8%/-11% vs our estimates) in 1QFY26. Sales volumes increased ~9% YoY to 4.8mt (+6% vs our estimates). Cement realization inched up ~1% YoY (down ~5% QoQ) to INR4,899.
* Opex/t remained flat YoY (-3% below our estimates). Variable/freight cost per ton increased ~7%/2% YoY, while employee cost/other expenses per ton declined ~6%/12% YoY. OPM expanded 2.3pp YoY to ~14% and EBITDA/t increased ~23% YoY to INR725. Depreciation/interest costs declined 10%/18% YoY, whereas ‘Other income’ increased ~87% YoY. ETR stood at 32.6% vs. 25.9% in 1QFY25.
Highlights from management commentary
* The company witnessed higher volume growth of ~15-18% YoY in the east and west regions, while in its core markets central and north, volume grew ~7-8%.
* The blended cement share increased to 89% from 84% in 1QFY25, while trade volume increased to 78% from 72% in 1QFY25. Its green power share stood at ~27% in 1QFY26.
* The premium cement share (as % of trade volume) stood at ~58% vs. ~59% in 1QFY25. The volume of its flagship brand, Perfect Plus, increased ~19% YoY in 1QFY26, led by healthy sales in Rajasthan, Madhya Pradesh, Uttar Pradesh, Maharashtra, and West Bengal. The volume of Unique Plus, another premium brand, grew ~37% YoY in 1QFY26, albeit on a lower base.
Valuation and view
* BCORP’s 1QFY26 operating performance was below our estimates due to lower-than-estimated realization. The company’s core market (central region) has underperformed due to depressed pricing and an early monsoon, which hurt volumes. It is currently focusing on its next phase of capacity expansion and timely completion.
* We have a BUY rating on the stock. We will review our assumptions after the concall on 31 st July’25 at 14:00 (IST) (Link for the Call).
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