Motilal Oswal is bullish on Birla Corporation has recommended buy rating on the stock with a target price of Rs 780 in its research report dated August 02, 2019.
Motilal Oswal's research report on Birla Corporation
Consol. volumes rose 4% YoY to 3.6mt. Cement realizations were up 10% YoY to INR4,954/t. Net sales grew 14% YoY to INR18.8b (our estimate: INR17.4b). Total cost/t was up 3% YoY to INR4,119/t. Thus, EBITDA/t rose 51% YoY to INR1,057. Accordingly, EBITDA grew 56% YoY to INR3.9b (our estimate: INR3.1b), with the margin improving 5.5pp YoY to 20.4%. PAT grew 68% YoY to INR1.4b (our estimate: INR1.1b).
Outlook
Ongoing capex plans will also keep debt at elevated levels over the medium term. Also, we have not factored in the clinker unit in Chanderia due to the lack of clarity on the timelines and capex amount. We value BCORP at 6.5x FY21E EV/EBITDA to arrive at a TP of ~INR780. Maintain Buy.
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