Detailed Narrative
Q2 FY26 Performance Overview
Birla Corpn. reported an EBITDA per tonne of INR712 for Q2 FY26 and INR714 for the first half of the fiscal year. This performance was achieved despite several headwinds, including subdued prices in the central region and a temporary operational setback. The company's strategy of focusing on the trade segment and premium products helped maintain profitability.
Operational Headwinds and Mitigation
The central region experienced the most subdued prices, and heavy unseasonal rains impacted demand. A breakdown at the Maihar unit in Q1 led to an overhang in Q2, requiring the purchase of clinker and impacting profitability by an estimated INR20-25 crores. However, the company's limited exposure (less than 15% of volumes) to the non-trade sector, which was heavily affected by GST changes, helped mitigate broader price declines.
Capacity Expansion and Project Updates
The Kundangunj plant is expected to commence operations by the end of Q3 FY26 or the beginning of Q4 FY26. For captive coal production, activities are ongoing at Sial Ghogri, and meaningful production from the Bikram Coal Mine is anticipated from the next financial year (FY27), contributing to backward integration and cost efficiency.
Capital Expenditure and Debt
The full-year FY26 capital expenditure guidance has been revised downwards to INR800 crores, from an earlier range of INR1,000-1,200 crores. This reflects the company's focus on sustainable capex rather than aggressive expansion. The net debt position of the company stands at INR2,450 crores.
Market Outlook and Demand Revival
Management anticipates a stronger second half of FY26 compared to the first. Cement demand is expected to revive in the three months ending December, with a projected year-on-year volume growth of 4-5%, driven by government capex. The company remains cautiously optimistic💬 about market conditions.
RMC Business Strategy
The Ready-Mix Concrete (RMC) business is progressing steadily and slowly, with a focus on strategic expansion that leverages brand synergy rather than aggressive volume growth. The company aims to expand in markets where its Perfect Plus brand has a strong presence, prioritizing value-added RMC products over vanilla offerings to ensure profitability.
Efficiency and Renewable Energy
Most of the company's older plants are operating at peak capacity and high efficiency, with Mukutban still in the process of reaching its full capacity. Birla Corpn. aims to increase its share of renewable energy to 32% in H2 FY26, primarily through a mix of solar and hybrid sources, contributing to cost savings and environmental goals.