Birla Corporation Q4 FY26 earnings call

Birla Corporation Limited reported a robust performance for Q4 and FY26. The company achieved approximately 4% volume growth for the financial year. FY26 EBITDA was close to INR800 crores, with a strong Q4 EBITDA nearing INR1,000 crores. Strategic efforts led to an increase in blended cement share from 82% to 88% and trade segment share from 70% to 77%. Logistics efficiency improved with lead distance reduced from 360 km to 337 km, and Mukutban plant volume grew from 24.6 lakh tons to 27.7 lakh tons, marking the highest ever numbers with existing capacity.

The company is pursuing a focused capacity expansion plan, aiming to reach 27.5 million tons by FY29, up from the current 21.5 million tons. This includes the ongoing Maihar Line-II project and new grinding units, particularly in Eastern UP around Prayagraj. New capacities of 1.4 million tons each for Prayagraj and Gaya Phase 1 are expected to commence by Q3/Q4 FY28. The total capex for adding 6 million tons of capacity from 21.5 to 27.5 MT is estimated at INR4,300 crores (net of GST), with INR900 crores planned for FY27.

Cost reduction remains a key focus, with the Bikram coal block expected to be a major lever. Full-fledged production from Bikram coal, with an annual capacity of 3.6 lakh tons, is anticipated by next year (FY27), up from 1.2 lakh tons this year. The out-landed cost for Bikram coal is projected to be INR1.00-1.05 per million calories, offering a significant arbitrage against the current domestic coal price of INR1.45. The company is also optimizing waste heat recovery, with plans to add 25-30 MW capacity in the next 1-2 years, and aims to increase renewable energy share in total power consumption from 31% to 37-38% by FY27-28.

Birla Corpn. is strategically expanding into Ready Mix Concrete (RMC) and construction chemicals, viewing these as brand extension and value chain plays rather than aggressive volume pursuits. The RMC business is progressing steadily, with a fifth plant soon to be operational in Uttar Pradesh, a core market for the 'Perfect Plus' brand. While the wall putty market is deemed commoditized, the company sees traction in construction chemicals, leveraging synergy with its premium brands. These initiatives are capex-light and are expected to add value to overall brand assets and positioning.

The jute business faced an 'abnormal' year due to historical high prices and market disruption^🌐s, leading to many players exiting or reducing operations. Management expressed confidence in its long-standing expertise and does not seek a strategic investor. Optimism was shared regarding potential positive policy changes from the government, especially with renewed attention from the central textile ministry and state government, which could address existing 'structural systemic issues' and foster industry improvement.

The company has an ongoing capex plan of INR4,000-4,500 crores, primarily funded by internal accruals. While debt is expected to increase to fund this growth, the net debt to EBITDA ratio is projected to remain below 2.5. The current net debt stands at approximately INR2,100 crores, with a peak net debt anticipated in the range of INR4,000 crores during the capex cycle. The company also expects to realize around INR130 crores in incentives for FY27, which will contribute to cash flows.