Buy Birla Corporation, target price Rs 1305: Axis Securities

Axis Securities has buy call on Birla Corporation with a target price of Rs 1305. The current market price of Birla Corporation Ltd. is Rs 1105.3. Time period given by analyst is one year when Birla Corporation Ltd. price can reach defined target.

Birla Corporation Ltd., incorporated in the year 1919, is a Mid Cap company (having a market cap of Rs 8538.35 Crore) operating in Cement sector.

Birla Corporation Ltd. key Products/Revenue Segments include Cement, Jute Goods, Royalty Income, Other Operating Revenue, Export Incentives and Others for the year ending 31-Mar-2022.


Financials
For the quarter ended 30-06-2022, the company reported a Consolidated Total Income of Rs 2218.06 Crore, down -4.95 % from last quarter Total Income of Rs 2333.54 Crore and up 26.14 % from last year same quarter Total Income of Rs 1758.41 Crore. Company reported net profit after tax of Rs 61.92 Crore in latest quarter.

Investment Rationale
With the commercialization of greenfield capacity of 3.9 MTPA at Mukutban (Maharashtra), the company’s future growth prospects look encouraging. With several cost rationalization initiatives underway along with better demand traction emerging from the government expenditures on various infrastructure schemes, a strong position in the demand- accretive central region, new capacity addition, and higher sale of premium products, the brokerage expects the company to register Volume/Revenue/EBITDA/APAT CAGR of 12%/18%/21%/37% over FY22-FY24E. The stock is currently trading at 10x and 6.5x FY23E and FY24E EV/EBITDA and EV/tonne of $71 and $66 respectively. It maintains BUY recommendation on the stock and value the company at 7.5x FY24E EV/EBITDA to arrive at a target price of Rs 1,305/ share. The TP implies an upside of 17% from the CMP.

Promoter/FII Holdings
Promoters held 62.9 per cent stake in the company as of 30-Jun-2022, while FIIs owned 4.34 per cent, DIIs 16.05 per cent.