Axis Securities has come up with their 2022 new picks which are quite interesting. This article emphasizes on the Birla corporation share which is been analyzed by the brokerage firm in a very apt form.
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BRIEF SUMMARY OF AXIS SECURITIES RESEARCH REPORT ON BIRLA CORPORATION SHARE
Birla corporation share is a flagship company of M.P. Birla group which primarily focuses on cement manufacturing.
The company has also built its footprint in Jute Goods industry.
Birla corporation share has 10 plants at seven locations for its cement division.
The company’s total cement manufacturing capacity stands at 15.6 million tonnes per annum.
The company has emerged as a dominant player in the Central India region.
INVESTMENT RATIONALE BY AXIS SECURITIES
To enhance growth, the company is focusing on capacity expansion:
Birla corporation share is developing a greenfield facility in Mukutban, Maharashtra with a capacity of 3.9 mtpa which would get operational by Q4FY22.
New growth avenues would open up once this facility would be commercialized.
Axis securities expects the company to deliver healthy volume growth of 12% CAGR over FY21-FY23E once the new facility is operational.
Spotlight would be on sale of premium products:
In the recent past, the company is focusing more on the sale of its premium cement products which has paid off well and is evident from the popularity which MP Birla Cement Perfect Plus and MP Birla Cement Samrat Advanced has attained in IHB (Independent home builders) segment.
There has been an improvement in the premium cement’s share which has achieved an overall trade sale of 50% from 40% last year.
Birla corporation share is focusing more on selling blended cement which forms 92% share of its overall cement sales.
It also increased its trade sales by over 80% which helped to enhance its valuation.
This a great strategical move by the company as blended cement requires lower utilization of natural resources such as limestone.
It helps the company in optimizing its costs as well as blended cement requires lower utilization of natural resources such as limestone.
Presence in demand-accretive Central region:
Birla corporation share is a prominent player in the demand accretive central India region.
The region’s overall cement consumption might increase at 6-7% CAGR due to the government’s keen attention on developing more infrastructure.
Company’s margin profile is consistent as the cement prices in this region tend to be less volatile as compared to other regions.
Valuation:
Birla corporation share is on a right track to expand its capacity by 25% which will reduce its concerns over volume growth.
Axis securities expects the company to register Revenue/EBITDA/APAT growth of around 15%/16%/21% CAGR over FY21-FY23E, and also a volume CAGR of 12%.
Birla corporation share is currently trading at 10x and 7.5 x of FY22E and FY23E EV/EBITDA. Axis Securities find it attractive as compared to other similar peers in the industry.
QUARTERLY RESULTS
Figures in Cr
| Quarterly Results | Sep-19 | Dec-19 | Mar-20 | Jun-20 | Sep-20 | Dec-20 | Mar-21 | Jun-21 | Sep-21 |
| Sales | 1,627 | 1,715 | 1,690 | 1,222 | 1,654 | 1,777 | 2,133 | 1,749 | 1,698 |
| Expenses | 1,315 | 1,420 | 1,345 | 989 | 1,272 | 1,447 | 1,741 | 1,406 | 1,431 |
| Operating Profit | 312 | 295 | 345 | 233 | 383 | 330 | 392 | 344 | 267 |
| OPM % | 19% | 17% | 20% | 19% | 23% | 19% | 18% | 20% | 16% |
| Other Income | 20 | 20 | 28 | 19 | 21 | 46 | -44 | 9 | 13 |
| Interest | 103 | 98 | 91 | 80 | 76 | 73 | 67 | 64 | 63 |
| Depreciation | 88 | 88 | 89 | 88 | 92 | 91 | 101 | 98 | 98 |
| Profit before tax | 141 | 129 | 192 | 85 | 236 | 212 | 180 | 191 | 119 |
| Tax % | 37% | 37% | -1% | 22% | 29% | 30% | -39% | 26% | 28% |
| Net Profit | 88 | 81 | 195 | 66 | 167 | 148 | 249 | 142 | 86 |
| EPS in Rs | 11.47 | 10.58 | 25.29 | 8.54 | 21.64 | 19.27 | 32.38 | 18.38 | 11.11 |
BALANCE SHEET
Figures in Cr
| Balance Sheet | Mar-15 | Mar-16 | Mar-17 | Mar-18 | Mar-19 | Mar-20 | Mar-21 | Sep-21 |
| Share Capital | 77 | 77 | 77 | 77 | 77 | 77 | 77 | 77 |
| Reserves | 2,550 | 2,848 | 3,209 | 4,203 | 4,418 | 4,729 | 5,409 | 5,678 |
| Borrowings | 1,302 | 1,281 | 4,255 | 4,130 | 4,049 | 4,282 | 4,046 | 4,082 |
| Other Liabilities | 1,066 | 1,023 | 2,157 | 2,664 | 2,787 | 3,087 | 3,368 | 3,367 |
| Total Liabilities | 4,995 | 5,229 | 9,698 | 11,075 | 11,332 | 12,175 | 12,900 | 13,204 |
| Fixed Assets | 1,928 | 2,033 | 6,362 | 7,368 | 7,263 | 7,325 | 7,323 | 7,236 |
| CWIP | 123 | 63 | 805 | 762 | 914 | 1,604 | 2,105 | 2,374 |
| Investments | 1,309 | 1,690 | 564 | 672 | 877 | 836 | 752 | 809 |
| Other Assets | 1,636 | 1,443 | 1,966 | 2,272 | 2,277 | 2,411 | 2,720 | 2,786 |
| Total Assets | 4,995 | 5,229 | 9,698 | 11,075 | 11,332 | 12,175 | 12,900 | 13,204 |
SHARE HOLDING
| Share Holding | Sep-19 | Dec-19 | Mar-20 | Jun-20 | Sep-20 | Dec-20 | Mar-21 | Jun-21 | Sep-21 |
| Promoters | 62.9 | 62.9 | 62.9 | 62.9 | 62.9 | 62.9 | 62.9 | 62.9 | 62.9 |
| FIIs | 2.61 | 3.85 | 4.17 | 3.62 | 3.38 | 3.8 | 3.61 | 3.96 | 3.68 |
| DIIs | 16.45 | 15.5 | 15.31 | 14.61 | 15.15 | 13.59 | 13.77 | 13.76 | 15.35 |
| Public | 18.05 | 17.76 | 17.63 | 18.87 | 18.57 | 19.72 | 19.72 | 19.39 | 18.07 |
Axis Securities recommend a BUYING opportunity with a target price of ₹ 1750/ share.
Disclaimer
This stock has been analyzed and recommended in the brokerage report of Motilal Oswal. Equity investing can cause a risk of financial losses. Due caution should be exercised by the Investors while dealing in equities. LearnTwoTrade as well as the author are not liable for any losses caused as a result of decisions based on the article.