Motilal Oswal - Birla (BIRLACORPN) MOSL: BIRLA CORPORATION (Buy)-Acquired subsidiary Reliance Cement reports strong profitability

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Motilal Oswal

MOSL: BIRLA CORPORATION (Buy)-Acquired subsidiary Reliance Cement reports strong profitability

â€‹Birla Corporation: Acquired subsidiary Reliance Cement reports strong profitability

(BCORP IN, Mkt Cap USD0.8b, CMP INR773, TP INR998, 29% Upside, Buy)

Steady standalone performance for 4QFY17: Standalone volumes fell 2% YoY to 2.15mt (est. of 2.25mt). However, BCORP reported a strong recovery sequentially (revenues up 23%) post demonetization. Gross cement realizations rose 2.5% QoQ to INR4,514/t (est. of INR4,446) due to price hikes in focus markets. Net sales stood at INR9.3b (+6% YoY; +26% QoQ; est. of INR9.2b).
Cost push offset by realization increase: Total cost/t for standalone operations increased 10% YoY (flat QoQ) to INR3,893 in 4QFY17 due to an increase in freight costs (on higher diesel prices) and RM costs. Standalone EBITDA/t at INR477 (-17% YoY,+16% QoQ) was impacted by cost push. Interest expense fell 29% QoQ to INR358m and other income rose 129% QoQ to INR399m.
Strong performance by acquired subsidiary Reliance Cement: BCORP reported consol. Financials for FY17, implying Reliance Cement for the period under consideration operated at 80% utilization, clocking volumes of 2.2mt. Our calculation suggests that EBITDA/t for Reliance Cement is at INR1,135 for the period under consideration v/s BCORPâ€™s standalone EBITDA/t at INR477 for 4QFY17. Higher profitability for Reliance Cement is due to sales tax benefits and cost efficiencies.Â

29/05/2017 8 EN

Underlying

Birla

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.

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INE340A01012 National Stock Exchange of India India

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Motilal Oswal

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.

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MOSL: BIRLA CORPORATION (Buy)-Acquired subsidiary Reliance Cement reports strong profitability

MOSL: BIRLA CORPORATION: Higher volume and realization drive EBITDA beat

BIRLA CORPORATION sees its risk increased and a downgrade to Neutral

MOSL: BIRLA CORPORATION (Buy)-Expansion plans provide growth visibility

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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