MOSL: BIRLA CORPORATION (Buy)-Highest EBITDA/t since FY12 on back of improved efficiencies
Birla Corporation: Highest EBITDA/t since FY12 on back of improved efficiencies
(BCORP IN, Mkt Cap USD0.6b, CMP INR502, TP INR583, 16% Upside, Buy)
- Margin improvement driven by lower costs: Consol. volumes increased 13.2% YoY to 3.85mt. Cement realizations rose 1.3% YoY to INR4,625/t. Net sales grew 13.4% YoY to INR18.7b (our estimate: INR17.4b). Total cost/t declined 1% YoY to INR4,060/t. Consequently, EBITDA/t increased 6% YoY to INR804. EBITDA, thus, grew 20% YoY to INR3.09b (our estimate: INR2.68b), with the margin improving 0.9ppYoY to 16.5%. PAT came in at INR1.28b (-2% YoY, our estimate of INR1.05b). For FY19, volumes grew 10% to 13.65mt, with net sales up 14% to INR65b and PAT growth of 54% to INR2.6b.
- Key highlights: (1) Utilizations for 4QFY19 stood at 99% while that for FY19 stood at 89%. (2)The Chanderia operations have been focusing on various cost reduction method and marketing activities along with enhancement of mechanical mining which has led to cost savings. (2) Blended cement accounted for 92% of the total sales in 4QFY19 while premium products accounted for 38% of trade sales (3) The company is investing in a capex of INR 24.5bn for 3.9mt Integrated unit in Maharashtra (commissioning by FY22) and INR 2.5bn for a grinding unit of 1.2mt in UP (by FY21 end) (4) It has now fully realized synergy benefits of RCCPL acquisition.
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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