Shares of a prominent cement company surged by 1.3 percent to reach an intraday high of Rs 1,550.00 per share on Tuesday, following a bullish recommendation from the Indian brokerage firm ICICI Direct, projecting an upside potential of 23 percent.
Birla Corporation Ltd, the flagship company of the M.P. Birla Group, is primarily engaged in the manufacturing of cement as its core business activity. The company was incorporated in the year 1919.
Birla Corporation Ltd is a small stock with a market capitalization of Rs 11,778 crores. On Tuesday’s Morning session, the company’s shares were trading at Rs 1,530.00 per share, up by 0.03 percent on the stock exchange. Comparing today’s high of Rs 1,550.00 per share and to a previous close of Rs 1,529.50 per share, the shares surged by 1.3 percent.
The company’s stocks have generated an overall return of 29.1 percent over the past year and 6.7 percent over the past 6 months.
Taking a look into the financials of Birla Corporation Ltd. On a year-on-year basis, the revenue from operations increased by 11.2 percent from Rs. 8,682 crores in FY22-23 to Rs 9,663 crores in FY23-24. While the net profits of the firm increased by 952.5 percent from Rs. 40 crores in FY22-23 to Rs 421 crores in FY23-24.
Indian brokerage ICICI Direct has Initiated a ‘buy’ recommendation on Birla Corporation Ltd with a target price of Rs 1,870.00 per share, implying an upside potential of up to 23 percent from Tuesday’s current price of Rs 1,527.95 a piece.
ICICI direct mentions that Birla Corporation Ltd’s operational and financial performance is to improve significantly in the upcoming period. The brokerage firm mentions in its filings that Birla’s Revenue, EBITDA, and PAT are expected to grow at 9 percent, 21 percent, and 51 percent CAGR respectively over FY24-26E.
The net debt/ EBITDA which is at 2.1x in FY24 compared to 4.8x in FY23 is expected to come down by 1x by FY26E. The valuation given by the brokerage firm is Rs 1,870 viz, 8.5x FY26E EV/EBITDA.
Birla Corporation also has commissioned its new cement facility of 3.9 Million Tonnes Per Annum (mtpa) capacity in Maharashtra. With this move, the company has expanded Its potential to enter untapped markets of West regions in India such as Maharashtra and Gujarat.
The company’s earnings per ton jumped by 65.9 percent from Rs 491/ton in FY23 to Rs 851/ton in FY24. This was due to better raw material sourcing and using their own coal and power, including solar energy and waste heat recovery.
As of March 2024, its shareholding pattern stood at 62.9 percent for promoters, 14.7 percent for the public, 6.8 percent for foreign institutional investors, and 15.6 percent for domestic institutional investors.
As per the brokerage firms report, the key risks for Birla Corporation Includes a slowdown in demand, delay in capacity expansion plan, Increment in both commodity prices and competitive intensity.
Written By Zahal
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