Birla Corporation Limited — Q4 FY25 earnings call

Call held 12 May 2025

Management summary

Birla Corpn. reported strong operational performance in Q4 FY25, marked by a 7% QoQ improvement in realization and EBITDA per ton exceeding Rs. 1,000. The company outlined ambitious capacity expansion plans to reach 27.6 million tons by FY29, supported by a planned CAPEX of Rs. 1,100 crores for FY26. Management expressed confidence in turning around the jute business and maintaining a healthy debt-to-EBITDA ratio below 2 for FY26, despite increased absolute debt for expansion.

Highlights

  • Q4 FY25 incentives of Rs. 41 crores, contributing to full-year incentives of Rs. 103 crores.

  • Realization improved by almost 7% QoQ in Q4 FY25, driven by price increases in North and East regions.

  • Mukutban volume for Q4 FY25 was 750,000 tons with an average lead distance of 450 Kms.

  • EBITDA per ton exceeded Rs. 1,000, indicating strong profitability.

  • Ambitious capacity expansion plans to 27.6 million tons by FY29, with a clear roadmap for intermediate milestones.

Concerns

  • Core financial metrics like Revenue, EBITDA, and PAT were not explicitly disclosed in the transcript.

  • Analyst concern regarding the jute business being a drag on ROCE, though management expressed confidence in a turnaround.

  • Analyst concern about the sustainability of high industry growth and profitability given upcoming capacity additions, which management addressed by focusing on internal strategy.

Key financials

3 periods

Headline

  • Realization Improvement (QoQ)
    7%

Q4 FY25

  • Incentives
    ₹41 Cr
  • Fuel Cost
    1.39 million per calories
  • Mukutban Volume
    7,50,000 tons

FY25

  • Incentives
    ₹103 Cr
  • CAPEX
    ₹437 Cr

What they filed

Q1 FY27: revenue up 7.8%, net profit down 3.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,953 2,257 2,815 2,454 2,207 +13%2,159 −4%2,836 +1%2,646 +8%
EBITDA177 248 534 347 305 +72%293 +18%510 −4%342 −1%
Net profit-25 31 257 120 90 +460%53 +71%295 +15%116 −3%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Capex ₹1,100 Cr internal accruals
    • Total CAPEX for 6.2 MT capacity expansion (including Kundanganj Line-III) ₹4,759 Cr
    For the current financial year, the debt-to-EBITDA ratio we are expecting to be well below two. The next two years, I do not see my debt-to-EBITDA exceeding much beyond two.
  • Debt Net ₹3,000 Cr · 1.9× EBITDA
    As I said, net debt as on date is expected to increase in this financial year because of the CAPEX program. As of now, we expect it to be in the vicinity of Rs.3,000 crores. But in terms of net debt-to-EBITDA, it definitely should be below two for this financial year.
  • Liquidity Liquidity disclosed Company has enough internal accruals to cater to CAPEX requirements.
    we feel that we have got enough internal accruals to cater to CAPEX requirement

Guidance & targets

Volume

  • Industry volume growth Volume · FY26 · High confidence 6-8%
    This year industry is expected to grow maybe between 6% and 8%. We should be in line with industry if not better.

    — Aditya Saraogi

Capacity

  • Total capacity Capacity · FY29 · High confidence 27.6 million tons
    our capacity will go to 27.6 million tons by FY29

    — Rajat Prusty

  • Total capacity Capacity · Q3 FY28 · High confidence 25 million tonnes
    by December Q3 FY28 we should be reaching the Maihar Line-II and two grinding setups at Prayagraj and Gaya Phase-I, which will add on our capacity to roughly 25 million tonnes.

    — Rajat Prusty

  • Total capacity Capacity · FY27 · High confidence 21.4 million tons
    This '26-27 you can say that our capacity will remain only in addition of 1.4 million ton which is going on presently on time as Kundanganj Line-3 that will be commissioned and that will continue to ramp up that volume to 21.4 million tons.

    — Rajat Prusty

Operational Efficiency

  • Green power share Operational Efficiency · next two years · High confidence 36-37%
    going forward you can see that our green power is going to increase in next two years time to around 36%, 37%.

    — Rajat Prusty

Capacity Utilization

  • Mukutban capacity utilization Capacity Utilization · next year · High confidence 85%
    we have been operating close to 80% capacity utilization, next year it will be 85%.

    — Sandip Ghose

Debt

  • Net Debt to EBITDA Debt · FY26 · High confidence well below two
    For the current financial year, the debt-to-EBITDA ratio we are expecting to be well below two.

    — Aditya Saraogi

  • Net Debt to EBITDA Debt · next two years · High confidence not exceeding much beyond two
    The next two years, I do not see my debt-to-EBITDA exceeding much beyond two.

    — Aditya Saraogi

Capex

  • Total CAPEX Capex · FY26 · High confidence 1,100 crores
    in terms of CAPEX for this year, we expect the total CAPEX to be around Rs.1,100 crores including the project CAPEX.

    — Aditya Saraogi

What to watch in Q1 FY26

Jute business transformation progress

Next quarter
Current New management team, new look, confident of turnaround.
Target Initial signs of improved profitability or strategic progress.

Why it matters

To verify the effectiveness of the new management focus and strategic integration in the historically underperforming jute business.

we have put a new management team, we are taking a very new different look at this business and I am personally confident that like you have seen a lot of turnaround in the company's main cement business over the last 10 years, you will see a transformation in the jute business also in the times to come.

Risks & concerns

  • Potential ban on mining near Chittorgarh Fort

    medium

    News article suggested a ban within 10km radius; management stated no veracity, studies completed, reports with court, and no material change expected.

    Analyst downplayed

  • Jute business being a drag on ROCE

    medium

    Analyst highlighted low profitability over 10 years; management sees it as a strategic asset with potential for scaling up and is implementing a new management focus for turnaround.

    Analyst acknowledged

  • Competitive pricing pressure from new industry capacity

    medium

    Analyst asked about sustainability of current profitability given upcoming capacity additions in the industry; management stated focus on internal strategy and execution.

    Analyst acknowledged

Q&A highlights

7 direct, 1 evasive
Realization improvement despite low incentives Direct
If you look at in the Quarter 4 across the country mostly the price in the North region gone up and the east also gone up, but our volume also if you look at the western region has gone up. So that has resulted into increase of our realization of almost 7% in the Quarter 4.

Clarifies the drivers behind the significant QoQ realization improvement, indicating regional pricing power and volume mix.

Asked by Shravan Shah

Sustainability of >Rs. 1,000 EBITDA per ton Evasive
if you were to look at the last quarter to this quarter, it is not always a like-to-like thing because how the prices move with the different geographies between last quarter and this quarter would be very different. So, it is not very linear. So therefore that is one factor. And secondly, therefore as an extension of that, we are not going to hazard any guess in terms of our EBITDA, how it is going to move forward and it will be I think misleading, or it could be erroneous to extrapolate the EBITDA and the subsequent quarter basis what has happened in Q4?

Management declined to provide forward guidance on EBITDA/ton, highlighting the non-linear nature of regional pricing and cautioning against extrapolation.

Asked by Shravan Shah

Long-term strategy and profitability of the jute business Direct
Jute business I consider to be for Birla Corporation it gives us a very distinct and unique advantage... we are now putting in a different management focus into the jute business... we are taking a very new different look at this business and I am personally confident that like you have seen a lot of turnaround in the company's main cement business over the last 10 years, you will see a transformation in the jute business also in the times to come.

Addresses a long-standing concern about the jute business being a drag, with management outlining a strategic shift and confidence in a turnaround.

Asked by Siddhant Dand

Selling non-strategic equity investments to fund cement CAPEX Direct
Those are not strategic investment for us, but currently we do not have any plans, we feel that we have got enough internal accruals to cater to CAPEX requirement, so as of now, we do not have any immediate plans to sell those investments.

Clarifies capital allocation strategy, indicating no immediate need to divest non-core assets for funding, relying on internal accruals.

Asked by Siddhant Dand

Sustainability of industry growth and profitability given new capacity Direct
We are not that large to influence industry trends or basically make those predictions. We have a clear strategy and we try to stay to that and stay close to our promises to our stakeholders as well as our investors without getting carried away by what is happening around us.

Management emphasizes focusing on their own strategy and execution rather than being swayed by broader industry dynamics or competitive capacity additions.

Asked by Jyoti

Update on Chittorgarh mining case and potential ban Direct
We have no such information on this. That statement was made, but we have not found any veracity and we will be surprised if such position is taken because this is contrary to anything which has been stated in the past and the case has been progressing in a particular manner, there has been certain studies which were prescribed by the Supreme Court, the studies have been completed and the reports are at the disposal of the court to consider, so we shall wait. We do not see any material change from whatever the position was earlier.

Addresses a regulatory risk, with management indicating no immediate concern and awaiting court decision, downplaying the likelihood of a ban.

Asked by Siddharth Gupta

Coal mining plans (Bikram, Marki Barka) and self-sufficiency Direct
Bikram coal mine, in Q3 of this year we are expecting to start that coal mine, but meaningful production will start from next financial year only. As regards the other coal mine, which is Marki Barka, that we expect to start only in FY28.

Asked by Saket Kapoor

Debt trajectory over the next two years Direct
In absolute terms, if you see, definitely there will be some increase in the debt. But as we have always maintained, you should look at our debt in terms of debt-to-EBITDA metrics. And while we have always maintained that as a policy, we would always like to remain below three. For the current financial year, the debt-to-EBITDA ratio we are expecting to be well below two. The next two years, I do not see my debt-to-EBITDA exceeding much beyond two.

Provides clarity on the company's debt management strategy, indicating a rise in absolute debt due to expansion but a controlled debt-to-EBITDA ratio.

Asked by Vipul K A Shah

3 min read 6 chapters

Detailed narrative

Q4 FY25 Operational Performance and Realization

Birla Corpn. reported strong operational performance in Q4 FY25, with incentives for the quarter totaling Rs. 41 crores, contributing to a full-year figure of Rs. 103 crores. Realization per tonne saw a significant QoQ improvement of almost 7%, primarily driven by price increases in the North and East regions, alongside volume growth in the West. The company achieved an EBITDA per ton exceeding Rs. 1,000, reflecting improved profitability. Fuel cost for the quarter was 1.39 per million calories.

Ambitious Capacity Expansion Plans

The company outlined aggressive capacity expansion plans, targeting a total capacity of 27.6 million tons by FY29. Intermediate milestones include reaching 25 million tonnes by Q3 FY28 with the commissioning of Maihar Line-II, Prayagraj, and Gaya Phase-I units. Kundanganj Line-3, adding 1.4 million tons, is expected to be commissioned in the second quarter of FY26, bringing total capacity to 21.4 million tons by FY27. The current clinker capacity stands at 13 million tons, with an additional 3.7 million tons planned for Maihar Line-II.

Capital Expenditure and Debt Management

Total CAPEX for FY25 was Rs. 437 crores. For FY26, the company plans a CAPEX of approximately Rs. 1,100 crores, including project CAPEX. The total CAPEX for the 6.2 million tons of new capacity (including Kundanganj Line-III) is estimated at Rs. 4,759 crores. While absolute debt is expected to increase due to debt-funded expansion, management aims to maintain a healthy financial position, targeting a net debt-to-EBITDA ratio well below two for FY26 and not exceeding much beyond two for the next two years. Net debt at the end of FY25 was in the vicinity of Rs. 3,000 crores.

Strategic Focus on Jute Business Turnaround

Addressing concerns about the jute business being a drag on ROCE, management articulated a strategic shift. They view jute as a distinct advantage with potential for scaling up, especially with growing interest in geotextiles and eco-friendly fabrics. A new management team has been put in place, and the business is being integrated more closely with main operations. Management expressed confidence in transforming the jute business, similar to the turnaround achieved in the cement business over the last decade.

Operational Efficiencies and Green Energy Initiatives

The company is actively working on optimizing its fuel mix to control power costs, which are currently trending downwards. Green power, currently around 25% of the energy mix, is targeted to increase significantly to 36-37% within the next two years through various projects including solar, hybrid, and Waste Heat Recovery Systems (WHRS). Mukutban plant's capacity utilization is expected to improve from close to 80% to 85% next year, indicating efficient operations.

Chittorgarh Mining Case and Regulatory Environment

Management addressed analyst concerns regarding a potential ban on mining within a 10-kilometer radius of Chittorgarh Fort. They stated that they have no verified information on such a ban and believe it contradicts previous statements. Studies prescribed by the Supreme Court have been completed, and reports are with the court. Management does not anticipate any material change from the earlier position and considers the scenario of a ban to be hypothetical, thus not planning for alternatives.

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