Small cap stock gets a Buy call with an upside potential of up to 54% 

Birla Corporation Limited, a flagship company of the M P Birla group, started Wednesday’s session in the green at Rs 908 levels. The company is primarily engaged in the manufacturing of cement as its core business activity. It has a significant presence in the jute goods industry as well. 

In Q3FY23, the company reported a total revenue of Rs 2,016.11 Crore which increased 15 percent from Rs 1,750.06 Crore in the same period the year earlier. In the previous quarter, their revenue stood at Rs 1,999.83 Crore. 

In the quarter under review, Birla Corporation Limited reported a loss of Rs 49.91 Crore compared to a profit of Rs 60.45 Crore in Q3FY22. However, on a QoQ basis, the company has narrowed its losses down from Rs 56.46 Crore. 

The company has a market capitalization of Rs 6,950 Crore and a dividend yield of 1.11%. The promoters hold a 62.9 percent stake with zero shares pledged while the Foreign Institutional Investors ( FIIs) hold a 4.49 percent stake. 

HDFC Securities is bullish on the stock and has assigned a ‘Buy’ rating with a target price of Rs 1,400 per share representing an upside of 54% from the current levels. 

“We continue to like BCORP for its large retail presence in the lucrative north/central regions and various cost-cutting initiatives. BCORP reported a healthy 11/5% volume/NSR growth YoY. We expect margin recovery to gain pace as fuel prices continue to trend down, continued ramp-up of the Mukutban plant, and incentive accruals H2FY24E onwards,” said the brokerage 

We expect margin recovery to gain pace as fuel prices continue to trend down, continued ramp-up of the Mukutban plant, and incentive accruals H2FY24E onwards. These along with no major near term Capex should reduce gearing from FY24 onwards, it added further. 

Written by Anoushka Roy

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