Birla Corporation - March 2013 Results Preview - Motilal Oswal

- 4QFY13 volumes are estimated to fall 1.5% YoY (+3% QoQ) to 1.61mt, on the low base of last year when mining ban was imposed. Average realizations are expected to improve by 5.5% QoQ (up 9.6% YoY) to INR3,959/ton.

- EBITDA margin is expected to decline by 1.7pp YoY (+1.9pp QoQ) to 10.3%, impacted by lower realizations, higher freight cost and negative operating leverage. EBITDA/ton is estimated to decline by ~INR40/ ton YoY (+INR111/ton QoQ) to INR439/ton.

- PAT estimated to decline 25% YoY (+34% QoQ) to INR433m.

- We downgrade EPS estimates by 4.8%/12.7%/13.4% for FY13E/FY14E/FY15E to INR31.2, INR35.6 and INR41.4 respectively to factor the lower realizations.

- The stock trades at 4.9x FY15E EPS, 2.2x EV/EBITDA and USD23/ton. Maintain Buy with a target price of INR374 (4x FY15E EV/EBITDA).

Source : Equity Bulls

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