Buy Birla Corporation, target price Rs 900: Motilal Oswal

Buy Birla Corporation, target price Rs 900:  Motilal Oswal

Motilal Oswal has buy call on Birla Corporation with a target price of Rs 900. The current market price of Birla Corporation Ltd. is Rs 728.5.

Birla Corporation Ltd., incorporated in the year 1919, is a Mid Cap company (having a market cap of Rs 5553.63 Crore) operating in Cement sector.

For the quarter ended 31-12-2020, the company reported a Consolidated sales of Rs 1776.62 Crore, up 7.40 % from last quarter Sales of Rs 1654.25 Crore and up 3.59 % from last year same quarter Sales of Rs 1715.05 Crore Company reported net profit after tax of Rs 148.42 Crore in latest quarter.

Investment Rationale
Valuation is attractive at 5.8x FY22E EV/EBITDA (~15% discount to its 10-year average) and USD62/t of capacity (an over 25% discount to replacement cost). It values BCORP at 6.5x Sep’22E EV/EBITDA to arrive at TP of INR900.

Promoter/FII Holdings
Promoters held 62.9 per cent stake in the company as of Dec 30, 2020, while FIIs held 3.8 per cent, DIIs 13.6 per cent and public and others 19.7 per cent.

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