MOSL: BIRLA CORPORATION (Buy)-Expansion plans provide growth visibility
BIRLA CORPORATION: Expansion plans provide growth visibility
(BCORP IN, Mkt Cap USD1.4b, CMP INR1388, TP INR1740, 25% Upside, Buy)
Reiterate Buy on attractive valuation
- BCORP’s 1QFY22 result was in line, with EBITDA growing by 47% YoY to INR3.4b, led by 39% growth in volume and EBITDA/t at INR1,026 (+6% YoY).
- The ongoing 3.9mtpa greenfield expansion at Mukutban (to be commissioned in 4QFY22) provides strong volume growth visibility in FY23.
- We expect a 14% EBITDA CAGR in FY21-23E, led by 14% volume CAGR, as it expands capacity by ~30% over the next 12 months. Valuation is also attractive at 7.4x FY23E EV/EBITDA. We reiterate our Buy
EBITDA up 47% YoY driven by 39% volume growth
- Revenue/EBITDA/PAT stood at INR17.5b/INR3.4b/INR1.4b in 1QFY22, up 43%/47%/115% YoY and was 3%/5%/7% above our estimate.
- Cement volume grew 39% YoY to 3.35mt (est. 3.25mt).
- While blended realization rose 3% YoY to INR5,221/t due to higher jute revenue, cement realization was flat YoY at INR4,943/t (+2% QoQ).
- Cost per tonne increased 1% QoQ to INR4,196 (up 2% YoY) due to fuel and freight cost inflation and higher other expenses.
Birla is engaged in the manufacture and sale of cement in India. Co.'s Cement division offers various cements, such as ordinary portland cement, 43 and 53 grades, portland pozzolana cement, fly ash – based PPC, low alkali portland cement, portland slag cement, low heat cement, and sulphate resistant cement. Its Jute division provides a range of products, including jute yarn, floor and wall covering, lino hessian, decorative fabrics, nursery cloth, scrim, jute carpets, non-woven jute felt, hydrocarbon-free bags/cloth, D.W. canvas, carpet backing cloth, hessian cloth/bags, and sacking bags/cloth.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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