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India Equity Research Reports, IPO and Stock News
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Well placed in high growth markets…
We recently met the management of Birla Corporation to understand the
company’s business and future plans. Birla Corp (BCL) is promoted by the
MP Birla group and has two major segments viz. cement and Jute which
contributes ~93% and 6% of the total revenue respectively. The
company has also presence in other segments like Auto trim parts, PVC
goods and Iron & Steel casting, however these segments has minimal
contribution to the total revenue. BCL has installed cement capacity of 6.0
million tonnes (mtpa) and having presence in northern, central and
eastern region. The company is expanding its cement capacity to 9.3
mtpa by FY12E by adding 1.5 mtpa in FY11E and 1.8 mtpa in FY12E. It
has also captive power capacity of 56.8 MW and expanding it by ~108
MW to reach ~164 MW by FY13E.
Capacity expansion to 9.3 mtpa by FY12E
BCL has two integrated cement units at Satna (MP) and Chanderia (RAJ)
and grinding units at Durgapur (WB) and Raebareli (UP). The total cement
capacity was 6.0 mtpa at the end of FY10. The company is expanding its
cement capacity of Satna (MP) unit by 1.5 mtpa which has already been
commissioned and under trial stages. This will take the total capacity to
7.5 mtpa by FY11E. Further the company is expanding the capacity of
Chanderia (RAJ) unit by 1.2 mtpa and Durgapur-I (WB) unit by 0.6 mtpa
which are expected to be commissioned by Q2FY12. The total cement
capacity will reach to 9.3 mtpa by FY12E after completion of the
expansion projects.
Power capacity addition of ~108 MW by FY13E
BCL had captive power capacity of 56.8 MW at the end of FY10, which
sources ~70% of the total power requirement by the cement business.
The company has recently commissioned 15 MW of waste heat recovery
power plants (WHRP) in Q2FY11 taking captive power capacity to ~72
MW. Further it is adding 7.5 MW of WHRP which is likely to be
commissioned by Q3FY11. Also, the company is planning to add 85 MW
of thermal power capacity, of which 35 MW at Satna (MP) and 50 MW at
Chanderia (RAJ), which is likely to come on stream by Q2FY13E. The total
power capacity will reach to ~164 MW by FY13E.
De-leveraged balance sheet
The company had net cash & equivalents of | 771.7 crores at the end of
FY10. The strong balance sheet would help the company to meet its
capital expenditure plans.
Outlook
The company has better market mix as it has presence in high growth
regions like north, central and east. We believe that the cement prices
would remain firm on account of favourable demand supply scenario in
these regions. However, we don’t have any rating on the stock.
Valuation
The company has better market mix as it has presence in high growth
regions like north, central and east. We believe that the cement prices
would remain firm on account of favourable demand supply scenario in
these regions. However, we don’t have any rating on the stock.
At the CMP of | 380 per share, the stock is trading at 5.3x its FY10
earnings and 3.1x its FY10 EBITDA. On EV/Tonne basis, it is trading at $78
per tonne on FY10 cement capacity.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Well placed in high growth markets…
We recently met the management of Birla Corporation to understand the
company’s business and future plans. Birla Corp (BCL) is promoted by the
MP Birla group and has two major segments viz. cement and Jute which
contributes ~93% and 6% of the total revenue respectively. The
company has also presence in other segments like Auto trim parts, PVC
goods and Iron & Steel casting, however these segments has minimal
contribution to the total revenue. BCL has installed cement capacity of 6.0
million tonnes (mtpa) and having presence in northern, central and
eastern region. The company is expanding its cement capacity to 9.3
mtpa by FY12E by adding 1.5 mtpa in FY11E and 1.8 mtpa in FY12E. It
has also captive power capacity of 56.8 MW and expanding it by ~108
MW to reach ~164 MW by FY13E.
Capacity expansion to 9.3 mtpa by FY12E
BCL has two integrated cement units at Satna (MP) and Chanderia (RAJ)
and grinding units at Durgapur (WB) and Raebareli (UP). The total cement
capacity was 6.0 mtpa at the end of FY10. The company is expanding its
cement capacity of Satna (MP) unit by 1.5 mtpa which has already been
commissioned and under trial stages. This will take the total capacity to
7.5 mtpa by FY11E. Further the company is expanding the capacity of
Chanderia (RAJ) unit by 1.2 mtpa and Durgapur-I (WB) unit by 0.6 mtpa
which are expected to be commissioned by Q2FY12. The total cement
capacity will reach to 9.3 mtpa by FY12E after completion of the
expansion projects.
Power capacity addition of ~108 MW by FY13E
BCL had captive power capacity of 56.8 MW at the end of FY10, which
sources ~70% of the total power requirement by the cement business.
The company has recently commissioned 15 MW of waste heat recovery
power plants (WHRP) in Q2FY11 taking captive power capacity to ~72
MW. Further it is adding 7.5 MW of WHRP which is likely to be
commissioned by Q3FY11. Also, the company is planning to add 85 MW
of thermal power capacity, of which 35 MW at Satna (MP) and 50 MW at
Chanderia (RAJ), which is likely to come on stream by Q2FY13E. The total
power capacity will reach to ~164 MW by FY13E.
De-leveraged balance sheet
The company had net cash & equivalents of | 771.7 crores at the end of
FY10. The strong balance sheet would help the company to meet its
capital expenditure plans.
Outlook
The company has better market mix as it has presence in high growth
regions like north, central and east. We believe that the cement prices
would remain firm on account of favourable demand supply scenario in
these regions. However, we don’t have any rating on the stock.
Valuation
The company has better market mix as it has presence in high growth
regions like north, central and east. We believe that the cement prices
would remain firm on account of favourable demand supply scenario in
these regions. However, we don’t have any rating on the stock.
At the CMP of | 380 per share, the stock is trading at 5.3x its FY10
earnings and 3.1x its FY10 EBITDA. On EV/Tonne basis, it is trading at $78
per tonne on FY10 cement capacity.
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