Birla Corporation Limited
Q4 FY25
Call date · May 12, 2025
1 · Management Commentary
Key Positives
- Q4 saw a 7% QoQ improvement in realizations, driven by higher prices in North and East regions and increased volumes in the West.
- EBITDA per ton exceeded Rs. 1,000, with no one-offs or incentives distorting operational performance.
- Mukutban plant ramped up to 80% capacity utilization, with 7,50,000 tons volume in Q4.
- Power and fuel costs trended downward, with fuel cost at Rs. 1.39 per million calories and green power share at 25%.
- Strong working capital inflow and robust internal accruals to fund CAPEX.
Key Negatives
- Jute business continues to be a drag on ROCE, though management is optimistic about its long-term prospects.
- Lead distance remains high (Mukutban: 450 km; overall: 350 km), impacting logistics costs.
- No specific margin or ROC guidance for the jute business; transformation is still in early stages.
- Uncertainty remains around the Chittorgarh mining case, though management sees no immediate risk.
Forward Guidance
- FY26 CAPEX planned at Rs. 1,100 crores; total expansion CAPEX (including Kundanganj Line-III) at Rs. 4,759 crores.
- Capacity to reach 27.6 million tons by FY29; ~25 million tons by Q3 FY28 with Maihar Line-II and new grinding units.
- Bikram coal mine to start in Q3 FY26 (meaningful production from FY27); Marki Barka mine expected in FY28.
- Green power share targeted to rise to 36–37% in two years.
- RMC business strategy being finalized; more details expected next quarter.
- FY26 volume growth expected in line with industry (6–8%).
- Debt-to-EBITDA to remain below 2x despite expansion; net debt expected at ~Rs. 3,000 crores by FY26 end.
2 · Q&A Highlights
Q 1 (Composite): What drove the sharp improvement in realizations and is the current profitability sustainable?
A (Management):
• Realization improvement was structural, led by price increases in North and East and higher volumes in West; no one-offs in EBITDA.
• Sustainability depends on regional price movements; management avoids extrapolating Q4 EBITDA.
Q 2 (Composite): What is the long-term strategy and margin outlook for the jute business?
A (Management):
• Jute business is being integrated with central management and targeted for value-added growth; new management team in place.
• Too early for margin or ROC guidance; transformation expected over time.
Q 3 (Composite): Will equity investments outside the group be sold to fund CAPEX?
A (Management):
• No immediate plans to sell non-strategic equity investments; internal accruals sufficient for CAPEX.
Q 4 (Composite): What is the capacity expansion timeline and associated CAPEX?
A (Management):
• Capacity to reach 27.6 million tons by FY29; ~25 million tons by Q3 FY28.
• FY26 CAPEX at Rs. 1,100 crores; total expansion CAPEX (including Kundanganj Line-III) at Rs. 4,759 crores.
Q 5 (Composite): What is the outlook for power/fuel costs and green power share?
A (Management):
• Power and fuel costs are on a declining trend; green power share to rise from 25% to 36–37% in two years.
Q 6 (Composite): Update on coal mining projects and self-sufficiency targets?
A (Management):
• Bikram coal mine to start Q3 FY26 (meaningful output from FY27); Marki Barka in FY28.
• Self-sufficiency will depend on cost economics, not just captive mining.
Q 7 (Composite): Status and risk regarding Chittorgarh mining case?
A (Management):
• No new developments; management sees no material change or immediate risk.
Q 8 (Composite): What is the expected volume growth and Mukutban plant ramp-up?
A (Management):
• FY26 volume growth to match or exceed industry (6–8%).
• Mukutban to reach 85% utilization in FY26.
3 · Other Key Numbers
- Total incentives accrued in FY25: Rs. 103 crores (Q4: Rs. 41 crores)
- Fuel cost in Q4: Rs. 1.39 per million calories
- Total CAPEX for FY25: Rs. 437 crores
- Mukutban Q4 volume: 7,50,000 tons; lead distance: 450 km (overall: 350 km)
- Working capital inflow: Rs. 346 crores (from other financial assets)
- Intercorporate deposit: Rs. 100 crores (recipient not disclosed)
- Planned capacity additions:
- Kundanganj Line-III: 1.4 million tons
- Gaya: 2.8 million tons (two phases)
- Aligarh: 2 million tons
- Prayagraj: 1.4 million tons
- Total clinker capacity: 13 million tons (current); 3.7 million tons planned (Maihar Line-II)
- Net debt expected by FY26 end: ~Rs. 3,000 crores
- Debt-to-EBITDA ratio: below 2x (current and next two years)
- Green power share: 25% (current); targeted 36–37% in two years
- No specific limestone reserve figure disclosed; stated as “sufficient”
- No one-offs in topline growth for Q4
- Clinker sales in Q4: marginal (exact number not disclosed)
- No investor presentation; only press release provided