Dolat Capital's research report on Birla Corporation
BCORP posted (-9.8%)/ 11.3%/ 64.1% YoY growth in revenue/ EBITDA/ APAT to Rs16.9 bn/ Rs3.4 bn/ Rs1.8 bn in Q4FY20 driven by +4.3% YoY realization growth (+3.1% QoQ). We expect 4.8%/ 3.4%/ (4.4%) revenue/ EBITDA/ APAT CAGR over FY20-22E led by (-19.2%)/ (34.6%) volume growth and (-0.5%)/ 2.0% cement realization growth in FY21E/ FY22E. We factor 3.9mtpa/ 1.2mtpa Mukutban (Maharashtra)/ Kundanganj (U.P.) expansion to commence by end of Q2FY22 vs. Q1FY22 (management guidance for Mukutban). Our 14.8mt volume estimate for FY22E has decent upside risk as we factor 50% (vs. 87.7% in FY20) utilization for H2FY22E for this 5.1mtpa expansion. These expansions likely to provide decent growth in FY23E also. These expansion will keep its net D:E high till FY22E which will start to decline from FY23E.
Outlook
We like BCORP’s focus on trade segment (81% share), increasing share of premium products (41% share in trade), higher share (92%) of high margin blended cement and sizable presence in relatively better regions of Central, North and expansion in West. Thus, we recommend Buy with a TP of Rs 650 based on 6.5x consolidated FY22E EV/EBITDA (Our TP factors EV of USD 59/tn).
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