Is Birla Corporation a Better Stock Pick Compared to Other Cement Stocks?

Synopsis: Birla Corporation Limited is seeing its margins jump, mainly because of premium cement, stronger pricing, and tighter cost controls. Choice International Equities has set a target price that points to about 63 percent upside, even with some short-term worries over volume and capacity.

The shares of this M.P Birla Group company, engaged in the manufacturing of cement of various kinds, also have a presence in the jute goods industry, are in focus after Choice Internal Equities projects a staggering 63 percent in its stock price. In this article, we will look at the reasons behind this significant uptick.

With a market capitalisation of Rs 7,971 crore, the shares of Birla Corporation Ltd are currently trading at Rs 1,013 per share, down 0.8 percent from its previous day’s closing price of Rs 1,021.40 per share. Over the past five years, the stock has delivered a muted 25 percent return, underperforming NIFTY 50’s return of 67 percent.

Analyst Comments

Leading brokerage house, Choice Institutional Equities, has assigned a buy call on Birla Corporation (BCORP) and has fixed a target price of Rs 1,650 per share, suggesting a potential upside of 63 percent from its current market price.

The brokerage believes that several factors, such as improved industry pricing, a shift towards premium products, and effective cost management, can lead to steady earnings growth in the coming years.

According to the brokerage, the company is well-positioned to take advantage of trends in the sector and its own expansion plans. Cement capacity is set to increase from 20 million tonnes (Mnt) to 27.5 Mnt by FY29, adding 7.5 Mnt. It also added that the company is focusing more on blended cement, premium products, and higher trade sales. These initiatives will help boost revenue and profit margins, and cost-saving measures are expected to lower operating expenses by about Rs 200 per tonne in the next few years.

The brokerage anticipates that EBITDA will grow at a 14 percent compound annual growth rate (CAGR) from FY25 to FY28, with expected volume increases of 4 percent, 7 percent, and 7 percent over FY26 to FY28, and realization growth of 3 percent, 1.5 percent, and 0 percent during the same period. 

Financials

In Q3 FY26, revenue declined 4.3 percent YoY and 2.2 percent QoQ, reaching Rs 2,159 crore, while EBITDA was Rs 293 crore, up 18 percent YoY despite weaker volumes of 4.2 Mnt. Realization was Rs 5,103 per tonne, and cost per tonne fell to Rs 4,412, showing efficiency improvements. 

Premium cement now represents 63 percent of retail sales (up from 59 percent last year), blended cement makes up 87 percent of total volumes (up from 79 percent), and trade sales grew to 78 percent (from 68 percent), all aiding margins.

The brokerage also noted improvements in cost efficiency, with production costs down 4 percent and renewable energy usage increasing to 31 percent from 26 percent. However, it warned that risks persist, such as potential clinker procurement needs and limited capacity expansion before 2027, which could hinder volume market share gains.

Overall, the brokerage believes BCORP’s approach, which includes focusing on premium products, increasing the blended cement mix, strengthening its trade channel presence, and optimizing costs, can steadily improve margins and earnings, supporting the projected over 60 percent upside.

Birla Corporation Limited sits at the heart of the M.P. Birla Group and stands out as one of India’s top cement makers, rolling out 20 MTPA. The story goes way back to 1919. They started with jute, but these days, cement is where most of the action is, though they haven’t completely let go of their roots in jute products. 

Picking up Reliance Cement’s assets gave them a real boost, spreading their reach all over India. They run several integrated plants, and there’s a clear push toward blended and premium cements. Lately, they’ve been leaning into sustainability, like switching to renewable energy. All in, Birla Corporation keeps pushing to stay competitive and eco-friendly in India’s building materials scene.

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