Birla Corp’s Shares Surge On Capacity Expansion Plans, Q2 Results Beat
Shares of Birla Corp. rose to the highest in nearly two months after the cement maker resumed its capacity expansion plans, as well as beat analysts’ estimates in the quarter ended September.
“In view of the recovery witnessed in the past few months, Birla Corporation has decided to bring back on track its Rs 250-crore capacity expansion project at Kundanganj, which, in May, was put on hold due to uncertainties over cement consumption,” it said in an exchange filing while announcing the quarterly earnings.
The company has also finalised a plan to scale up its own capacity to 25 million tonnes by 2025.
Besides, the cement maker said its factory under construction at Mukutban in Maharashtra will be commissioned in September 2021. The construction was delayed owing to the Covid-19 lockdowns and subsequent labour shortage. The Maharashtra government has extended the window of tax incentives for the factory by 18 months to December 2020, it said in the filing.
The near Rs 150-crore project to scale up kiln capacity in Rajasthan is also nearing completion and will be hooked up during the next planned shutdown of the plant, the filing said.
Q2 Earnings Snapshot
The West Bengal-based cement maker saw its net profit surge 89% over the year earlier to Rs 166.6 crore in the quarter ended September. That compares with the Rs 111-crore consensus estimate of analysts tracked by Bloomberg.
Other highlights (year-on-year)
- Its revenue rose 2% to Rs 1,654.2 crore, and was higher than the estimated Rs 1,563 crore.
- Operating profit rose 23% to Rs 382.7 crore, the highest ever quarterly Ebitda. That compares with the Rs 301-crore forecast.
- Lower power and fuel costs, along with a decline in transport and forwarding expenses, led to a 400-basis-points expansion in margin to 23.2%.
- Ebitda per tonne rose 20.8% to Rs 1,154, which according to Nirmal Bang is the highest in 10 years.
- Realisations per tonne rose 1.3% to Rs 4,862.
Nirmal Bang maintained its ‘buy’ recommendation on the stock and a price target of Rs 1,235 apiece. Birla Corp is also the brokerage’s top pick in the cement space.
Shares ended 4% higher - the most in nearly two months to Rs 668.75. The stock ended higher for the fourth straight day.