1
Please refer to important disclosures at the end of this report
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1
Birla Corporation Ltd (BCorp) is a Kolkata based geographically well diversified
cement manufacturer with 15.4mt grinding capacity and 10mt clinker plants.
With eye on growth, the company has chalked out a comprehensive capacity
expansion programme spanning FY18-H1FY21 entailing a 4mt grinding unit in
Mukutban (Maharashtra), which is envisaged to propel total capacity to ~20mt.
Post this expansion, BCorp will be the fifth largest cement manufacturer in India.
Besides this, it has sought environmental clearance to set up 1.5mt cement
capacity at Chanderia (Rajasthan) and also valuable mineral concessions in
Karnataka, Rajasthan, AP, HP and MP would provide ample opportunity to
expand manufacturing plants across India. BCorp has strengthened its position
in Central India through acquisition of Reliance Cement, rendering it the third
largest cement player in the region with 8.5mt installed capacity. The housing
shortage in Central region is one-fourth of the entire country and government’s
push for housing is envisaged to boost cement demand at a higher clip. BCorp is
one of the lowest cost producers cement company. BCorp’s Raw Material(RM)
cost is lower than industry as a) primary RM is procured mostly from its mines
situated near plants b) transportation through long belt conveyor/ropeway
reduces the cost and c) the company has its own slag processing plant near steel
plant and procures fly ash & slag from nearby areas. Other manufacturing cost
is lower as employee expenses as well as other overheads are lower. P&F cost is
higher than the industry average, which is likely to dip as BCorp is installing
12MW WHRS in Satna. BCorp’s revenue and capacity jumped 2.4x and 2.7x,
respectively, over FY09-17. BCorp’s cashflows has improved from `244.95cr in
FY12 to `677.26cr in FY17 and has also maintained average dividend payout of
25.82%.Further BCorp’s operating margins has improved from 11.90% in FY14
to 17.02% in FY17. The company has a ROE of 3.11% and it is currently trading
at a valuation EV/EBITDA of15.21x of TTM earnings. Hence BUY.
BUY
CMP `1140
52 Week High / Low
1228.75/608.9
Avg. Daily Volume
1,914
Cement
Market Cap (` cr)
8,807
10
BSE Sensex
32,869
Nifty
10,138
Face Value (`)
Reuters Code
BRLC.NS
BCORP:IN
0.5
Vaibhav Agrawal
022 3935 7800 Ext: 6808
[email protected]gelbroking.com
Birla Corporation Ltd
Others |Cement
Dec 04, 2017
2
Birla Corporation Ltd |Cement
2
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Birla Corp
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)