Buy Birla Corporation, target price Rs 1740: Motilal Oswal

Motilal Oswal has buy call on Birla Corporation Ltd. with a target price of Rs 1740. The current market price of Birla Corporation Ltd. is Rs 1367.4. Time period given by analyst is one year when Birla Corporation Ltd. price can reach defined target.

Birla Corporation Ltd., incorporated in the year 1919, is a Mid Cap company (having a market cap of Rs 10644.06 Crore) operating in Cement sector.

Financials
For the quarter ended 31-03-2021, the company reported a Consolidated Total Income of Rs 2146.12 Crore, up 17.74 % from last quarter Total Income of Rs 1822.82 Crore and up 24.92 % from last year same quarter Total Income of Rs 1718.03 Crore. Company reported net profit after tax of Rs 249.33 Crore in latest quarter.


Investment Rationale
Valuation is reasonable at 7.4x FY23E EV/EBITDA (~10% discount to its 10- year average) and USD85/t of capacity (~15% discount to its replacement cost). The brokerage values BCORP at 8x Sep’23E EV/EBITDA to arrive at TP of INR1,740.

Promoter/FII Holdings
Promoters held 62.9 per cent stake in the company as of June 30, 2021, while FIIs held 4 per cent, DIIs 13.8 per cent and public and others 19.4 per cent.