Company Update : Birla Corporation Ltd By Motilal Oswal Financial Services Ltd
Beat estimates; EBITDA/t at INR1,027 (est. INR721)
* BCORP reported 4QFY25 EBITDA above our estimate, led by higher-thanestimated sales volume (+5% beat) and realization (+6% beat). Realization growth at ~8% QoQ was a major surprise, which management needs to clarify; this may include higher incentive income. 4Q EBITDA grew ~13% YoY to INR5.3b (~50% beat). OPM rose 1.2pp YoY to~19% (est. ~14%). EBITDA/t grew 5% YoY to INR1,027 (est. INR721). PAT (adjusted for exceptional of INR384m, impairment of mining rights) rose ~52% YoY to INR2.9b (~175% above estimate, aided by higher other income, lower interest cost and ETR).
* The company announced capacity expansion plans - 1) 3.7mtpa brownfield clinker capacity at Maihar, Madhya Pradesh (to be commissioned by 3QFY28) and three Greenfield grinding units with a combined capacity of 6.2mtpa in central India (3.4mtpa) and Bihar (2.8mtpa) to be commissioned in phased manner during FY28-29. Total estimated capex is INR43.4b (implying capex cost/t of USD82).
Volumes rise 7% YoY; opex/t declines 3% YoY
* Consol. revenue/EBITDA/Adj. PAT stood at INR28.1b/INR5.3b/INR2.9b (up 6%/13%/52% YoY and +11%/+50%/+175% vs. our estimates) in 4QFY25. Sales volumes increased 7% YoY to 5.2mt (+5% vs. our estimate). Cement realization was flat YoY and up 8% QoQ at INR5,177 (+6% vs. estimate).
* Opex/t declined ~3% YoY (in line with estimate), due to a 6% decline in variable costs (+2% vs. our estimate). Employee cost/other expense per ton declined ~7%/2% YoY, whereas freight cost increased ~4% YoY. OPM increased 1.2pp YoY to ~19% and EBITDA/t increased 5% YoY to INR1,027. Depreciation/Interest costs dipped 5%/11% YoY, whereas ‘Other income’ increased 88% YoY. ETR stood at ~22% vs. 29% in 4QFY24.
* In FY25, consol. rev/EBITDA/adj PAT declined ~5%/15%/22% YoY. Sales volume increased 2% YoY and realization fell ~7% YoY. OPM contracted 1.7pp to ~13%. OCP stood at INR16.7b vs. INR16.2b in FY24. Capex stood at INR4.5b vs. INR5.3b in FY24. FCF stood at INR12.2b vs. INR10.9b in FY24.
Highlights from management commentary
* Increase in demand and prices during the quarter led to improved realizations and capacity utilization for the company.
* The blended cement share declined to 82% from 84% in 4QFY24, whereas trade volume increased to 73% from 71% in 4QFY24. Premium cement share (as % of trade volume) increased to 59% vs. 55% in 4QFY24.
* BCORP achieved 11% YoY volume growth in premium product sales in FY24- 25, led by its flagship brand, Perfect Plus. Premium products formed 60% of trade channel sales, up from 54% in FY23-24. Perfect Plus grew 15% and now commands a price premium in its core Uttar Pradesh market.
Valuation and View
* BCORP’s 4QFY25 operating performance was above our estimates due to higher-than-estimated sales volume and realization. Management is optimistic about the improvement in operations and profitability.
* We have a BUY rating on the stock. We will review our assumptions after the concall on 12th May’25 at 14:00 IST (Link for the Call).
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