Maintain BUY on Birla Corporation - Healthy performance - HDFC Securities

Mr. Rajesh Ravi, Institutional Research Analyst, HDFC Securities and Mr. Saurabh Dugar, Institutional Research Analyst, HDFC Securities

Birla Corp's (BCORP) 4QFY21 consolidated revenue/EBITDA/APAT surged 20/8/106% QoQ (26/14/58% YoY) to INR 21.3/3.9/3.1bn respectively, led by robust volume growth and healthy realisation. However, input and fixed cost inflation dragged down unitary EBITDA by 8/11% QoQ/YoY to INR 918/MT. We continue to prefer BCORP in the mid-cap space for its large retail presence in the northern/central markets and ongoing opex reduction. Further, the ongoing expansion will increase its capacity to 21mn MT by FY23, boosting volume growth visibility. We maintain BUY with an unchanged target price of INR 1,451 (8.5x Mar'23E consolidated EBITDA).

4QFY21 highlights: Sales volume grew 18/26% QoQ/YoY, riding on healthy demand. BCORP increased the share of premium cement sales to 53% (of trade sales) vs 40% YoY. NSR increased 2% QoQ on price recovery. Higher input cost led to 4/2% QoQ/YoY rise in unitary opex. Therefore, unitary EBITDA fell 8/11% QoQ/YoY, moderating EBITDA rise to 8/14% QoQ/YoY.

FY21 highlights and outlook: FY21 net sales declined 2% YoY to INR 69.2bn as volume fell 1% and NSR stood flat YoY. The share of premium cement sales increased to 50% vs 40% YoY. Blended cement remained high at 92%. Unitary opex cooled off 1% YoY, led by lower fuel costs during 1H and BCORP's ramping up green fuel share to 20% vs 15% (YoY) of total consumed power. Thus, unitary EBITDA firmed up 4% YoY to INR 1,007/MT and EBITDA came in higher 3% at INR 13.7bn. BCORP's cash conversion cycle remained unchanged YoY at 27days. Net debt stood at INR 34bn vs 35bn YoY, on slower Capex (at INR 8bn vs 10bn YoY). These factors led to positive FCF of INR 1.8bn vs outflow of INR 0.3bn YoY. Amid COVID 2.0, BCORP's Mukutban expansion is delayed by three months to Dec'21. We maintain our earnings estimates, BUY rating, and target price of INR 1,451 for BCORP (8.5x Mar'23E consolidated EBITDA).

Shares of BIRLA CORPORATION LTD. was last trading in BSE at Rs.1044.05 as compared to the previous close of Rs. 995.05. The total number of shares traded during the day was 24880 in over 1567 trades.

The stock hit an intraday high of Rs. 1049.4 and intraday low of 999. The net turnover during the day was Rs. 25532170.

Source : Equity Bulls

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