Company Update : Birla Corporation Ltd by Motilal Oswal Financial Services Ltd
EBITDA beat; EBITDA/t at INR717 (est. INR559)
* Birla Corporation’s (BCORP) 2QFY26 performance was above our estimates, driven by lower-than-estimated opex/t and better performance in the Jute business. EBITDA increased ~72% YoY to INR3.0b (~31% above our estimates). OPM expanded 4.7pp YoY to ~14% (est. ~11%). EBITDA/t increased ~61% YoY to INR717 (est. INR559). The company reported a PAT of INR905m (~139% above our estimate, aided by higher other income and lower interest cost).
* Cement sales during the quarter were affected by excessive rainfall across the company’s key markets, subdued prices, and temporary disruptions from GST changes. Despite these challenges, it expects a demand recovery in the Q3FY26, driven by government infrastructure spending and improved rural housing demand, leading to ~4-5% YoY volume growth. The North and West are likely to drive this recovery, while the South and East remain oversupplied. Operational disruptions impacted clinker output, though realizations are expected to remain stable with a slight uptick as demand improves
Volumes rise 7% YoY; OPM expands 4.7pp YoY
* Consol. revenue/EBITDA stood at INR22.1b/INR3.1b (up 13%/72%) YoY and in line/+31% vs estimates) in 2QFY26. Net profit stood at INR905m (+139% vs estimates) vs a loss of INR252m in 2QFY25. Sales volumes increased 7% YoY to 4.3mt (in line). OPM expanded 4.7pp YoY to ~14%.
* Opex/t remained flat YoY (-2% v/s estimates), with a ~2% decline in variable costs (-4% v/s estimate). Employee cost/freight expense per ton increased ~1%/4% YoY, whereas other expenses per ton declined ~1% YoY. EBITDA/t increased ~61% YoY to INR717. Depreciation/Interest costs dipped 7%/22% YoY, whereas other income increased 56% YoY. ETR stood at ~30.9% vs. 29.4% in 2QFY25.
* In 1HFY26, Revenue/EBITDA/Adj PAT stood at INR46.6b/INR6.5b/INR2.1b (up ~12%/50%/28x YoY). OPM expanded 3.5pp to ~14%. Realization increased ~4% YoY to INR5,161, while EBITDA/t increased ~38% YoY to INR722. OCF stood at INR2.1b vs INR3.1b in 1HFY25. Capex stood at INR2.2b vs INR2.1b. Net cash outflow stood at INR105m vs net cash inflow of INR1.0b in 1HFY25
Highlights from management commentary
* The market remained challenging during the monsoon, though demand in North and Central India held steady. A demand revival is expected in the December quarter, supported by a healthy monsoon and higher rural incomes driving housing activity.
* The blended cement share increased to 89% from 83% in 2QFY25, while trade volume increased to 79% from 71% in 2QFY25. However, the Premium cement share (as % of trade volume) declined to 60% vs. 62% in 2QFY25.
* BCORP increased its renewable power use to 30% of total consumption in 2QFY26 (vs. 25% last year). Its Chanderia and Durgapur plants began sourcing 6mw and 6.98mw of renewable power, respectively, with the share expected to rise to ~32% in 2HFY26. The Board has approved 9mw of Solar BESS at Chanderia and 5mw of solar power at Mukutban, while Birla Jute Mills is adding a 2.1mw rooftop solar plant by Dec’25
Valuation and view
* BCORP’s 2QFY26 was above our estimates, driven by lower-than-estimated opex/t and better performance in the Jute business. Management is prioritizing its expansion plans and the timely execution of ongoing capex projects.
* We have a BUY rating on the stock. We will review our assumptions after the concall on 10th Nov’25 at 14:30 IST (Link for the Call).
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