Birla Corp - Long Term Outlook Remains Positive; Retain Buy: Axis Securities

Axis Securities Report

Birla Corporation Ltd.'s overall performance in FY24 was impressive, driven by higher volumes sold, better capacity utilisation, and lower operational costs. It aims to expand its capacity to 25 million tonnes per annum over the next two years to strengthen its position in its operating region.

While headwinds related to cement prices are expected to persist, cement demand is anticipated to remain resilient due to increased government expenditure on infrastructure development, housing demand under PM Awas Yojna, and real estate growth.

The company is well-positioned in the demand-accretive Central region, deriving around 50% of its sales from there, with the upcoming capacity set to further consolidate its position and increase market share.

The stock is currently trading at eight times FY26E enterprise value/Ebitda and EV/tonne of $72.

We maintain our Buy recommendation on the stock and value the company at nine times FY26E EV/Ebitda to arrive at a target price of Rs 1,500/ share. The target price implies an upside of 14% from the current market price.

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