Birla Corporation

Birla Corporation (CMP: 642; MCap: Rs.4944 crore)
About the company
Birla Corporation Ltd is the flagship company of MP Birla Group which also runs companies including Universal Cables Ltd., Vindhya Telelinks Ltd., Birla Cables Ltd., Birla Furukawa Fibre Optics Pvt Ltd and Hindustan Gum & Chemicals Ltd. Post the demise of Mrs. Priyamvadaji Birla, as per her will, Mr. Rajendra Lodha and his son Mr. Harsh Lodha, were made the promoters of the group companies. However, the ownership of Birla Corp Ltd is under legal dispute, being contested by Mr. Harsh Vardhan Lodha and the descendants of the Birla family Birla Corp’s installed capacity post acquisition of Reliance Cement Company Private Limited (RCCPL) in August, 2016 has increased to 15.58 million tonne (MT). It has seven plants located in states including Rajasthan, Madhya Pradesh, Uttar Pradesh, West Bengal and Maharashtra. It has presence largely in North and Central India. The company is the second largest cement players in Central India after Ultratech Ltd. The group sells its products under well established brands viz MP Birla Perfect Plus, MP Birla Unique, MP Birla Samrat, MP Birla Ultimate, MP Birla Ultimate Ultra, MP Birla Chetak, MP Birla Concrecem, MP Birla Multicem, MP Birla PSC, etc. Apart from cement, the company also manufactures jute and runs a steel foundry but their contribution is less than 5% of revenue and profitability.

What is interesting about the company?
Increase in aggressiveness of the group and induction of professional management: From being a sleepy management running decade old plants, promoter group and management has become aggressive with buyout of RCCPL and then announcement of brownfield and green field capex at Kundanganj (UP; 1.2 MT grinding unit) and Mukutban (Maharashtra; 3.9 MT integrated unit with 40 MW captive power plant & 10.60 MW waste heat recovery system [WHRS]) respectively. Kundanganj capex is around Rs.250 crore while the one at Mukutban is of Rs.2450 and expected to be completed in FY22. Post expansion, company’s total cement capacity will expand to 20.68 MT.

Furthermore, acquisition of RCCPL was a well thought out decision as RCCPL’s cement unit commenced operations only in 2014 and are based on European technology with high operating efficiencies. Post take over by Birla Corporation, RCCPL has become the most efficient player in the central India with highest EBITDA/tonne. RCCPL also has mineral concessions in Maharashtra, Karnataka, Andhra Pradesh and Himachal Pradesh which can help the company in future expansions.

Favorable demand-supply dynamics in central and north India: In cement, it is very difficult to forecast the demand and price dynamics. But one thing which can be analyzed is the new supply coming in the region. In terms of new capacity, not much new capacity is expected to be added and capacity utilization is expected to remain healthy going forward also for the plants located in the region.


(source: Shree Cement presentation)

Various measures taken for improvement in operating efficiency: Over the past few years, the company has been taking various measures to improve its operating efficiency. These include setting up of waste heat recovery system (WHRS) at Maihar of 12.25 MW, setting up of solar plants at Chanderia, Satna and Maihar aggregating 16 MW, setting up of railway sidings at Kundanganj amongst others. All these measures are expected to improve the operating efficiencies further and increase the EBITDA/tonne. Furthermore, the company has one of the highest shares of blended cement in its total sales at 94% while share of trade channel was at 83% during H1FY20, amongst the highest in the industry. The company has hired experienced professionals from large companies including Ultratech, Lafarge, Holcim etc and they have taken various steps to improve the operations. During H1FY20, the company’s sales volume increased by 3.9% while the industry along with the large players saw de-growth in volumes. The company has been taking various steps to improve efficiency in logistics also including reduction in lead distances, judicious rail-road mix, improvement in turn-around time, increase in direct dispatches, better freight negotiations and digital initiatives. There has been significant improvement in performance of standalone company (which had much lower EBITDA per tonne at around Rs.500 – 600) driven by higher capacity utilization of Chanderia plant & increase in mechanical mining there (the operations of the plant have been impacted due to ban on regular mining of limestone at its Chanderia mines due to its vicinity to Jaisalmer fort). Furthermore, the mining capacity of coal mines feeding Maihar plant are being doubled.


  • The company has done EBITDA of Rs.698 crore during H1FY20. EBITDA per tonne improved to Rs.1003 in H1FY20 as compared to Rs.684 during FY19 on account of increase in realization and various efficiency improvement measures that the company has taken over the past 2 – 3 years. Furthermore, the impact of installation of WHRS at Maihar, doubling of coal mining capacity there along with installation of 16 MW solar plants across plants in the company is expected to have full impact only from FY21 onwards.
  • The Kundanganj grinding plant is expected to be operational from FY21 while the Mukutban plant will commence operations from FY22. The installed capacity will reach 20.68 MT by March – April, 2021. During FY23, I expect the volumes to touch 19.06 MT and assuming EBITDA of 1000 per tonne (factoring in withdrawal of GST refunds in RCCPL’s old plants at Maharashtra and Madhya Pradesh, increasing efficiency and GST refunds in new plants at Kundanganj and Mukutban), enterprise value is expected to touch around Rs.18,000 – 19,000 crore (assuming 9 times EV/EBITDA). The net debt is expected to peak at Rs.4,500 crore in FY21 and then reduce. Birla Corp’s peers having capacity of 10 MT and above (haven’t considered industry leaders like Ultratech, ACC, Ambuja and Shree Cement) including Ramco Cement, Dalmia Bharat & JK Cement trade at EV/EBITDA between 8.5 – 15 times. Other peers like JK Lakshmi Cement and India Cement trade at lower valuations primarily due to various issues.

Key Risks

High Debt: The company’s net debt will peak at Rs.4500 crore next year and has higher EV/EBITDA compared to its peers. However, most of these debt is long term debt and even the new debt the company is taking for Mukutban greenfield project is for 12 years. Furthermore, the company has a rating of ‘AA’ from all the rating agencies and the company has been able to raise new debt at lower rate of interest of less than 9%. In addition, some financial flexibility is derived from it being part of MP Birla Group.

On-going litigation over the promoter: There is an ongoing litigation about the appointment of Mr. Harsh Lodha as the promoter from the Birla family. This can pose a risk in case of transfer of ownership to Birla family. However, the company is run by professionals.

Key Financials

Peer Comparison

Excel File for the working: Birla Corporation Financial Working.xlsx (29.8 KB)

(Disclosure: Invested. This is not a recommendation or advice to purchase the stock)


details one can find at

going forward company will face limestone constraints going forward.

There will be improvement in the EBITDA Margin due to falling pet coke prices, soft crude, coal & slack prices .

Demand is favourable due to government has brought down GST rates for housing from 8% to 1% in affordable housing & 12% to 5% in regular housing which will provide boost to the sector.

Around 1/5th demand comes from public infrastructure spending and govt has allocate a good amount in the budget

Negative : High Debt which you already mention


  • Why not one consider ACC which has almost every where present or Dalmia cement whose balance sheet is one of the strongest in the sector ?
  • Capex is that from internal accrual or from debt ?
    Concall excerpts from peers

    disc : interested but not invested



This interview is a summary of all the points explain above by @ankitgupta
Birla corp recently won Coal blocks too.

For Quarterly updates please visit their website and go to press release section for updates. Birla Corporation


Birla Corporation has come out with decent set of number for Q3FY20. Volume growth of 7% in these tough environment is satisfactory in my opinion. There was softening in prices of cement across the country during Q3FY20. However, the prices have increased across regions like North, Central and West in January, 2020. The working of the quarterly results is given below:

Management in TV interview post Q3 results highlighted about some green shoots for pick up in demand. The link is given below:

(Disclosure: Invested)


3 posts were split to a new topic: VP Cyclicals 2.0: Cement Industry Key Issues & Cyclicality

Hi @ankitgupta,

Fantastic work yet again and good details shared. Recent qtrs have been pretty good by the company, especially q4 (as you expected). However, as the stock reaction has been opposite, I was wondering about the risks:

  1. The debt seems quite high. If we remove the last couple of qtrs, then interest coverage ratio is just 3-4 times. Given Covid, there is a high chance that company might have to operate at low utilization for next few quarters (real estate is gone for next few qtrs) - how do you think about this? In such a case recent good results have no meaning?
  2. The depreciation rate looks low.
  3. Other group cos also seem to be leveraged.



Hi Ayush,

Debt: Although, I am also new to cement industry but from whatever I understand cement companies are high cash flow generating companies. They hardly have any working capital requirements and most of the PAT is largely converted to cash. Let’s look at the cash flow from operations of the company during FY17 - FY20 (post acquisition of Reliance Cements):


If we look at the debt trajectory of the company, its debt increased primarily in FY17 when it acquired Reliance Cements for enterprise value of Rs.4800 crore. Currently, the company is undertaking capex at Mukutban, Maharashtra to set up new cement plant with capacity of 3.7 MTPA with total cost of Rs.2400 crore and debt of Rs.1625 crore. The project will get completed in June, 2021. Gross debt will peak out around Rs.4500 crore in FY21 as indicated by CFO in one of the TV interviews.
As on March 31, 2020, the company had gross debt of Rs.4226 crore and cash and liquid investments of around Rs.700 crore. Furthermore, close to 4100 - 4150 crore of debt of the company is long term in nature. Most of the cement companies are able to borrow for a long tenure. The company has a credit rating of ‘AA’ from both CARE and CRISIL. For Mukutban project, the company’s term loan of Rs.1,625 crore has maturity of 12 years. This is a snippet from the Q1FY20 press release:

Despite the performance of the company being impacted during FY21, given its liquidity, strong cash flows and long term nature of debt, I personally dont think debt will be a challenge for them.

  1. Depreciation: Cement assets are pretty long term assets with life of more than 10 years. Except for Shree Cements which depreciates pretty aggressively, Birla Corp’s depreciation is broadly in line with large and mid sized players in the industry. Also, cement companies are usually valued on EV/tonne, EV/EBITDA and replacement cost.

  2. Not sure about group companies. Not much inter-group transactions except for historical investments in few group companies. Also, don’t see loans and advances being extended to them. Furthermore, some comfort can be derived from zero pledging from promoters.


In his speech about his learnings in the stock market, Jatin Khemani mentioned that the market rates cement companies based on their capacity.

I checked the current valuations in terms of EV/EBITDA instead of EV/Ton to keep things simple.

So the divide starts at 5000 Cr Sales. (5000 Cr / Realisation 5000 Rs per Ton) ~ 10 MT capacity.

The outliers are Prism, Birla, Dalmia, ACC and Ambuja. Prism has single digit Op Margin and huge debt. ACC and Ambuja have merger issues. The odd man out are Birla and Dalmia.

JK Cement, Ramco and even India Cements are trading at double the EV/EBITDA of Birla despite having lower Sales. By FY21 end, Birla will add 5.2 MT capacity. Re-rating has to happen?

Possible reasons for low pricing

  1. Debt: Birla’s Net Debt is 3500 Crores = 3x NOPAT
  2. Low PAT: Star Cement with 1/4th of Birla’s Sales had PAT of 300 Cr while Birla PAT was 250 Cr for FY19. Birla PAT increased to 500 Cr in FY20 aided by cost reduction. Still low because of Interest cost!

Looking at Birla’s historical EV/EBITDA, it is trading at the lowest level in the last 10 years!

10 Yr average is 10x, trading at 5x now.


A big mid-cap is trading at small-cap levels.

Disc - Small tracking position. Will add more.


Hi Ankit, good analysis. Any clue till what time Subsidy will continue for Reliance Plants, Birla Cement plants the subsidy is already over I believe. What impact will it have on the profits once subsidy goes away.

In a Jan 2020 interview, Mgmt said its Rs.300 per Ton on a standlaone basis for Reliance plant. On a consolidated basis, it is Rs. 100 per Ton or Rs.30 Crores absolute value.

Thanks @ankitgupta and others for contributing to the post.
Have been trying to study the business and industry for the past few days and here are some of the things I noted:

  1. Limestone shouldn’t be a problem for the company for the next 10-15 years or so (I checked the notes to previous Annual Reports and the amortization for the mining right is about 5-7% every year)

  2. FY20 has been a good year for the industry due to increased demand and favorable factors like lower price of pet coke and freight cost etc and many players’ key metrics like EBITDA/ton have seen improvements, and is not specific to Birla Corp.

  3. New management seems to be doing a really good job-working to improve efficiency in logistics, installation of solar plants, securing coal mines, launching new products (wall putty and water repellent premium cement) building railway siding at Kundanganj plant etc.

Few of the things which I’m unable to understand (and I would be really thankful if someone can help me out here :slight_smile: )

  1. Where exactly is growth going to come from for the company? (Although the company plans to increase it’s production capacity by 33%, we don’t know if the demand will increase)
    Since there is no ‘new market’ and price can only be increased marginally (in the retail segment), the company will have to increase its market share and dislodge competition- my question here is, is the branding/consumer trust for Birla Cement so strong that consumers will not prefer other companies’ cement? And that other players in the retail segment can’t beat Birla’s competitive advantage?

  2. Since forecasting demand is pretty tough in cement industry (now, the added covid impact just makes it more tough), it feels like the industry is a bit opaque in terms of judging quantitatively about- how many tons of cement can the company sell next year/what will be the % of realization etc and hence, further making guesses about the ‘potential’ of the company, valuation etc
    Is there any way to go about this?

  3. Can anyone explain a bit about ‘Blended Cement’? (Is it a kind of OPC? Does it have higher price? Does it create a difference in demand between trade and non-trade segments?)

    (Source: Q1FY20 Report)

  4. Is high debt the main reason why the company is a bit discounted by Mr. Market? (on metrics such as EV/EBITDA)

Looking forward to some guidance for going ahead with my analysis :slight_smile:

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Hi Ansh,

Let me try and answer few of your questions:

1. Where exactly is the growth going to come from? In cement, what I have realized it is difficult to predict demand. Even the best of cement analysts, will not have any hang on the demand projection. The only thing which you can predict is the supply (existing and new). New supplies can be predicted as cement companies take atleast 2 - 3 years to develop a new greenfield project. I doubt if branding plays a big role in cement. From whatever studies I have done on the sector, it seems that north and central region has least new capacities coming in and better demand - supply dynamics. One important point to note is that over the past decade because of lackluster demand from real estate and infrastructure sector, cement prices on a pan India level havent increased even at the rate of WPI inflation.

  1. There are few ways to value a cement company - replacement cost, EV/EBITDA (current or some 2 - 3 year projection) and P/B. Replacement cost - It takes around USD 130 - 150 per tonne to build a new cement plant. So one can look at EV of the company and see how much discount is there in the price, higher the discount, better it is in terms of valuations. Furthermore, valuations are dependent on size of the company, efficiency as well as regions in which the plants are located (demand - supply dynamics of the region). Higher the size of the company in terms of capacity, higher will be its valuations. Normally, cement companies are bucketed into four categories: 1. Less than 5 million tonne 2. 5 million - 10 million tonne. 3. 10 million to 20 million tonne 4. 20 million tonne and above. Efficiency plays a big role in the company which comes from various factors including fuel, power, transportation, %age of retail sales etc. More efficient players like Shree Cement and Ramco Cement will get premium from the market because of their higher EBITDA/tonne compared to industry. Normally, EBITDA/tonne of 1000 or more is considered to be decent by industry standards (players like Shree do more than 1200 - 1300 EBITDA/tonne). And lastly the location of the plant. Demand - supply dynamics of a region plays a big role in determining the capacity utilisation as well as economies of scale of the company. For eg, since Southern region has overcapacity, the players in the region (except Ramco to a certain extent) usually get lower valuations. However, the same can change if there is higher demand in the region.

  2. Blended cement includes a certain %age of additives like fly ash in addition to OPC. You can actually google that to get more information on it. From what I have read is that margins in blended cement are higher than pure OPC.

  3. I dont know why Mr. Market gives discount to the company compared to other cement companies and probably higher debt is one of the major reasons for that. Another reason could be that company’s Chittorgarh plant had limestone mining issues which resulted in lower EBITDA/tonne of the standalone business. However, the same has also improved in FY20 post relaxations given by court.


From Emkay report
Birla Corp

 BCORP, the flagship company of M. P. Birla Group, has its presence in North, Central and East regions. It is expanding grinding cement capacities by 25% in West region, which should aid volume growth in mid-FY22/23E and
help it touch 19.5mt capacity. The recovery in cement demand in North, Central and East markets has surprised positively post easing of lockdowns. It derives 43% of its sales volumes from the Central markets (26.6% in UP and
16.6% in MP), 25% from North markets and 29% from the East.

 BCORP has taken cost savings initiatives such as: 1) solar power plants of 16MW which may yield cost reduction of Rs10/ton and
2) participation in coal block auctions which helped it to secure two coal mines – cost reduction of Rs68/ton is possible when mining starts. Apart from this, replacement of clinker transport from Maihar, MP to Mukutban, Maharashtra plant may help cost savings of Rs231mn (Rs13/ton on a blended basis) for Butibori, Maharashtra grinding unit. Incentives from various state governments should boost EBITDA by 12-16% till FY23E.

In the sector,
companies that expanded capacities have generated higher stock return.

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I had attended the AGM of Birla Corporation. Some of the points I noted during the AGM are highlighted below:

• Vikram and Brahmpuri coal mines procured last year. Will help in reducing power cost of the company.
• Raised prices in May. Second half of May some green shoots of recovery. June was a good month. Too early to predict how current year will pan out. Workers will return only after Diwali. Government will be compelled to reduce spending. Healthy monsoon – rural economy should do well. Cement production in India will be 25 – 30% lower than last year. Trying to make up for loss of volumes and profit in Q1 in the remaining year. Lower fuel cost benefits will be negatively impacted by lower capacity utilization. Aggressive reduction of fixed cost and reduction in transportation cost.
• 3.9 million Mukutban project – construction is going on. Remobilisation of project will take time. Complete project by August, 2021. Kundanganj – on hold. Chanderia – clinker capacity expansion to be completed in current year.
• Reduction of 52 bps in interest cost in FY20.
• Close look at costs to reduce them.
• Marketing initiative – focus on premium and blended cement.
• Sale of blended cement accounted for 94% in June quarter. Retail sales – 84%. Premium segment sales at 44% in Q1FY21 vs 36% in Q1FY20. Reduce marketing spends this year.
• Time to quietly work to make ourselves on improving efficiency and will continue to invest for growth.
• Conservative company – go into projects only when project adds value to us. Mukutban is very exciting project for us. Small presence in Maharashtra through Butibori grinding unit. Maharashtra – 32 million tonne is the annual demand and 15 million tonne was imported from other states. Setting up of plant which will be amongst the lowest cost producer for clinker and cement along with incentives received. Hoping to complete it in August, 2021. Had covid not happened, we would have completed these project earlier in a record time. Availability of the man power is the key challenge. All machineries have been received.
• Leveraging – slightly leveraged. Company is conservative on leverage front but still comfortable. Looking to reduce interest cost. Don’t see any problem with regards to leveraging. FY21 we will reach peak leverage. From FY22 onwards, leverage will come down.
• Dividend – lower – In the midst of pandemic when we announced dividend. As and when things improve, we will definitely reward our shareholders.
• Try to settle dispute with government and various authorities of government.
• RCCPL – 100% subsidiary – merger will not be feasible. As and when it becomes feasible, we might look for merger.
• Lot of hard work has gone in transforming company to reduce cost, improve on every front. It is still a work in progress.
• Premiumisation has been one of our strategies for cement sale.
• Logistics and distribution – lot of scope of improvement here. Wherever possible we will look to reduce it.
• Siyal and Gogri coal mines – contribute 60% of Maihar’s coal requirement at full capacity.
• Coal mine won in e auction in December, 2020.
• North and Central did much better in Q1? Q1 results are not comparable actually. Lot of different situations at different plants. View of district magistrate where a plant is located plays a big role in it. Slightly unlucky as we had to face lot of stringent issues from local authorities in many of our plants. However, things are normalized now. From Q2 onwards, improvement will be visible.
• Jute is an area where the company and board feels that’s its an industry for future. Its profitable now. Concentrate on value added goods. In the midst of lot of innovation in the business. Product quality and innovation will help us.
• Capex – We are continuing in Mukutban – it will add lot of value to cashflows and profitability. Kundanganj – put on hold but will consider it later.
• EBITDA compared to other players is lower – We compare our performance to each and every peers of ours – Work towards improvement in efficiency. In terms of market share and EBITDA, we have come a long way. We are hopeful to maintain the EBITDA going forward.
• Much more covid ready today than in March and April. Barring unforeseen circumstances, things will normalize earlier than expected. Worse is behind us. Perform much more normally compared to pre COVID.
• Today we are looking for people to work. Haven’t laid off any body. In fact, we are hiring for construction of plants.
• Looking to cut costs on line by line basis. We are looking at it very aggressively. Results will be out in months ahead.
• NGT order for Chanderia mines – doesn’t have any impact on our operations. Looking to remove the order. MOEF has stated it doesn’t have any impact on the wildlife.
• WHRS – kiln operations at various plants. 11 MW WHRS is fully operational now and full year impact will be seen in current year. Even solar plant will benefit us. Total 50 – 55 crore cost saving on annual basis due to WHRS and solar plant.
• Railway sidings at Kundanganj – full year impact this year and help us reduce cost in future.
• Brownfield expansion and other expansion – Brownfield expansion at Durgapur being initiated.
• RCCPL – higher profitability – better efficiency and new plants. Old plants of Birla Corp (standalone) have their limitation – higher cost of minining at Chanderia, higher fuel and power cost. Plants running efficiently now. Streamline operations now and improve BCL’s performance.
• Within couple of years, company will be comfortable in gross and net debt to EBITDA once Mukutban starts operations.
• Everything is work in progress – we will do better.
• Growth – we have now started discussing our next phase of major expansion. We want to reach 25 million tonne capacity and capacity utilization of 90% or more by 2025. Doubling of clinker production at Maihar being looked at. Grinding unit in Bihar, grinding unit in north UP, Haryana and even in Gujarat are being worked upon. Details are being worked on.
• Mukutban – Maharashtra sells 2.5 – 3 million tonne cement every month. We plan to produce 3 lakh tonne every month. Capacity of 10% or slightly lower than 10% of the total market of Maharashtra. Selling in Vidarbha and middle part of Maharashtra. Mumbai and Pune markets have long lead team from where our plant are located. For blended cement, Mumbai and Pune markets are not attractive as there OPC sells more. We will have factory which will be very modern and efficient. All the parameters of Mukutban will be better than Maihar which currently is our most efficient facility. It will take 2 – 3 years to ramp up and run our plant at full capacity.
• Digitisation – one very major step we have taken in the company. We are planning to move from ERP, SAP to analytics and AI. Started work in two major areas including logistics. Results are already visible. Started pilot project at Chanderia. Will roll out at other facilities as well. From purchase right upto consumption, digitization will play a role. Cost cutting earlier meant cutting advertisement etc. Digitisation takes you to another level – decision making at a level which we cannot fathom today. We will be one of the lowest cost producer of cement in years to come. Holistic view of all we do. Next will be selling and manufacturing after logistics where digitization will focus on. Imagine a factory which will not have any breakdown except for maintenance.
• Brand building, selling and distribution – premium that we charge for our premium products is 300 – 320 per tonne which works out at 20 per bag. Premiumisation works at different level. Samrat and Chetak need to be placed at higher level. Selecting areas which has high potential for volume and bottom line. We are taking one or two such pilot sites where we are trying out different ideas. Test marketing them now.
• People focus - Everything depends on the kind of people we have. How well they are aligned to the company. People are very important in any company. That is where we will need lot of attention. Alignment and awareness is much better today in company’s employees than it was few years back. People have a greater sense of belonging to the company. Other good cement companies are willing to join us.
• Initiatives will be digitization, reaching out to communities, spend time with every unit’s management.
• Peak gross debt – gross debt – lower than 5000 crore and net debt level to be less than 4000 crore. Net debt to EBITDA is expected to peak at less than 3 times. It will reduce thereafter despite our plans to grow to 25 million tonne.
• Validity of incentives – 2/3rd of incentives come from Kundanganj plant which will remain till 2029.

(Disclosure: Invested)


Thanks @ankitgupta for sharing these wonderful and detailed notes. The capex plans looks very encouraging along with reduction in debt levels.

Some interesting points on the same in this recent credit ratings report:‘ind-aa’%2Fstable

Also, overall trajectory of RoCE is also improving which is a good sign.

Disclosure: Tracking. Only for educational purpose.


What according to you is the reason the market is assigning low valuation to Birla Corp compared to its peer companies? Is it only due to the ownership battle or are there other reasons as well? And if the case is finally decided in favour of the Birlas, how will it be viewed by the market? Can you share your views please.

Thanks in advance.


Bullish commentary from Edelweiss few days back -
BCL: 1) Operations have largely stabilised post the turnaround, with the company consistently clocking an EBITDA of over INR 1,000/t;
2) Upcoming 5 MT capacities to drive market share gains
and reduce concerns over growth constraints; and 3) De-leveraging from FY22 onwards to drive a further re-rating
At the CMP of INR 741, BCL trades at 6x FY22E EV/EBITDA. Our target price of INR 1,170 per share
(8x FY22E EV/EBITDA) implies an upside potential of 58%.


Highlights from management commentary

  • In terms of sales volumes, blended cement accounted for 91%/92% in 4QFY21/FY21 and trade sales accounted for 78%/80%. Premium cement accounted for 53%/50% of trade sales volumes.

  • The share of WHRS/solar in power consumption improved to 17.2%/2.8% in FY21 (v/s 14%/0.9% in FY20), which should control power inflation.

  • The Mukutban 3.9mtpa greenfield integrated plant commissioning has been delayed further to end-3QFY22 due to labor availability concerns.

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