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Nirmal Bang Report
Key metrics missed our estimates:
Overall Birla Corporation Ltd.'s revenue declined by 9.1% YoY (deviation from our/ consensus by 6.9%/8.5%) due to 0.7% YoY (9.7% QoQ) decline in volume and 7.4% YoY (7.1% QoQ) in realisation/tonne. Ebitda/tonne declined by 13.1% YoY (39.7% QoQ) to Rs 590 (deviation from our/consensus by ~30%/33%) due to a disappointing quarter marked by slow demand, labor shortages, heat waves and implementation of code of conduct ahead of elections.
The management believes that the current crisis is temporary, and volume growth and pricing environment will be much better in the upcoming quarters. Therefore, they prefer value strategy over relegating to a lower pricing point.
We compared Birla Corp to other cement companies operating in similar regions/markets. Except for Shree Cement, all other cement companies reported a quarterly reduction in volume.
All four companies witnessed 2-6% drop in realisation/tonne, the largest being by Birla Corp at 7% while Ebitda/tonne declined by 21-40%, with Birla Corp reporting 40% drop.
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