Birla Corporation - Cost efficient player - Motilal Oswal

Possible resolution of mining ban, a key trigger; Buy

- Birla Corp (BCORP) is one of the most cost efficient cement producers, with average cost of production being consistently 8-10% lower than the MOSL Cement Universe.

- We expect strong scale-up in BCORP's volumes over FY12-15 on the back of stabilization of recently added capacities and favorable market mix.

- The ban on limestone mining at its Rajasthan plant has impacted its volumes and cost adversely. Resolution of the mining ban would be a key trigger.

- Strong balance sheet renders flexibility to expansion as both expansion plans marred by litigation. We value BCORP at INR464/share (4x FY15E EV/EBITDA with implied EV/ton of USD52). Maintain Buy; our target price implies 46% upside.

Source : Equity Bulls

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