BirlaNu Ltd — Q4 FY25 earnings call

Call held 26 May 2025

Management summary

BirlaNu Ltd reported a challenging FY25 marked by weak macroeconomic conditions and significant price erosion across product categories, particularly in Pipes. Despite these headwinds, the company achieved robust revenue growth, especially in its Pipes, Construction Chemicals, and Parador segments, driven by strong volume expansion and strategic initiatives. Q4 showed positive momentum with 9% revenue growth and 14% profitability improvement, though the company recorded a PBT loss for the quarter and faced losses in its Pipes division due to inventory write-offs and the Crestia acquisition.

Highlights

  • Consolidated revenue for FY25 was ₹3,615 crore, 7% higher than last year.

  • Operating EBITDA for FY25 was ₹88 crore.

  • Pipes segment delivered 66% revenue growth in Q4 and 57% for FY25, driven by 80% volume growth in Q4 and 76% overall.

  • Construction Chemicals segment recorded 23% revenue growth during FY25 and crossed the ₹100 crore per annum mark.

  • Parador achieved 7% revenue growth and 9% volume growth for FY25, with Q4 revenue up 10% and positive EBITDA of EUR1.7 million.

  • AAC block capacity in Chennai doubled to 4 lakh cubic meters per year.

  • New state-of-the-art greenfield plant for OPVC pipes commissioned in Patna.

Concerns

  • Uncertain macroeconomic and weak demand scenario across markets in FY25.

  • Price declines of 2% to 5% across most product categories, with Pipes seeing over 10% decline due to PVC resin meltdown.

  • Consolidated PBT stood at a loss of ₹20 crore for Q4 FY25.

  • Pipes division incurred inventory losses of ₹15 crore for the full year.

  • Crestia's revenue declined from ₹330 crore in FY24 to ₹152 crore in FY25, contributing to a ₹45 crore loss in the overall Pipe division.

  • Roofing Solutions revenue remained flat in Q4 due to pricing pressure and softness in rural demand, with industry-wide degrowth in volumes.

Key financials

  1. Consolidated Revenue ₹3,615 Cr +7%YoY
  2. Operating EBITDA ₹88 Cr
  3. Consolidated Revenue Q4 ₹929 Cr +9%YoY
  4. Consolidated PBT Q4 ₹-20 Cr
  5. Pipes Division PBT Loss FY25 ₹-48 Cr
  6. Total Debt ₹708 Cr

What they filed

Q1 FY27: revenue up 11.6%, net profit up 812.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue774 805 929 1,052 810 +5%858 +7%1,010 +9%1,174 +12%
EBITDA-42 -1 22 40 -10 +77%-13 −1782%-8 −134%73 +84%
Net profit15 -35 -25 -1 -43 −392%-53 −49%-22 +10%9 +812%
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.

Segment breakdown

  • Roofing Solutions
    ₹254 Cr Revenue Q4₹1,134 Cr Revenue FY25-1.5% Pricing Change FY25
  • Building Solutions (Walls)
    ₹141 Cr Revenue Q4₹539 Cr Revenue FY2510% Operating Profitability
  • Polymer Solutions (Pipes)
    ₹185 Cr Revenue Q466% Revenue Growth Q480% Volume Growth Q457% Revenue Growth FY2576% Volume Growth FY25₹15 Cr Inventory Losses FY25
  • Flooring Solutions (Parador)
    ₹348 Cr Revenue Q47% Revenue Growth FY259% Volume Growth FY251.7 Mn EBITDA Q446.2% Materials Margin
  • Construction Chemicals
    23% Revenue Growth FY25₹82 Cr Revenue FY25
  • Putty
    ₹120 Cr Revenue FY25₹147 Cr Revenue FY24₹179 Cr Revenue FY23
  • Crestia (part of Pipes)
    ₹152 Cr Revenue FY25₹330 Cr Revenue FY24₹45 Cr Loss FY25

Capital allocation

high confidence
  • Capex ₹200 Cr
    • Pipes segment ₹80 Cr
    • Parador ₹40 Cr
    • Walls business ₹40 Cr
    • Roofs and Construction Chemical ₹40 Cr
    • OPVC plant Phase 1 ₹35 Cr
    • Building Blocks facility expansion ₹40 Cr
    So not factoring in any inorganic or any major new plant that we may get on to. But given the plans that we have, it's in the zone of about Rs.200 crore for this year. ... So, if I do a rough estimate, then about 40% of this will be in Pipes, around 20% in Parador, another 20% in our Walls business and then Roofs and Construction Chemical will be the last 20%.
  • Debt Gross ₹708 Cr · 0.6× EBITDA
    Our total debt stood at Rs.708 crore as of 31st March 2025 with a debt equity ratio of 0.58x. The increase in debt during the year was primarily to fund the acquisition of the Crestia Group in the month of April 2024. ... Current standalone debt is around Rs.295 crore and Parador debt is around Rs.280 crore. Rs.130 crore is in Crestia.
  • M&A Crestia Group Acquisition · Integrated · Consideration ₹260 Cr (undisclosed)

    Strengthened position in Eastern region, contributed to Pipes segment growth.

    Contributed to increased debt (Rs.130 crore) and a Rs.45 crore loss in the Pipes division for FY25.

    The successful acquisition and integration of Crestia was a key achievement. With that, we have grown the Topline brand in the retail segment. ... Rajat, there is a depreciation because we have invested almost Rs.260 crore in Crestia. So, there is a depreciation on account of acquisitions plus depreciation on account of our organic investment, which we did in 2018 to 2020, that comes to around Rs.30 crore. And on top of it, there is a borrowing in Crestia book, which is part of this business, the interest amount will be around Rs.13 to 14 crore per year on this loan.

Guidance & targets

Revenue

  • Company Sales Growth Revenue · next 3 years · High confidence double sales
    As stated earlier, we want to double our sales as a company over the next 3 years and inch closer to our ambition of being a $1 billion company.

    — Akshat Seth

  • Company Size Revenue · next 3 years · High confidence $1 billion

    — Akshat Seth

  • OPVC Phase 1 Revenue Potential Revenue · High confidence north of Rs.100 crore
    The Phase 1 of the investment, which is where we are, will have a revenue potential of north of Rs.100 crore and the capacity will be in the zone of about 5,000 tons per annum.

    — Akshat Seth

  • Construction Chemicals Portfolio Growth Revenue · next 2 to 3 years · Medium confidence growth
    But as a combination, the growth will come from the Construction Chemical part of that portfolio over the next 2 to 3 years.

    — Akshat Seth

Profitability

  • OPVC Operating Margins Profitability · Medium confidence mid-teens
    So OPVC market, I'm sure you are aware of how the margin structure looks like. These are much better than the traditional PVC pipes. So, we should be in the mid-teens as far as the operating margins for that particular segment is concerned.

    — Akshat Seth

  • Parador Operating Margin Profitability · Medium confidence 8% to 10%
    That said, for us, the steady-state margin and if we start replicating the revenue numbers that we were doing pre-war situation is in the 8% to 10% range at an operating margin level.

    — Akshat Seth

Volume

  • Pipes Business Volume Growth Volume · next 3-year period · Medium confidence almost doubling ourselves
    I've already stated the overall aspiration that we have for this business over the next 3-year period. So that would effectively mean that every year, we'll have to be almost doubling ourselves.

    — Akshat Seth

Margin

  • Parador Materials Margin Margin · High confidence 46% to 48%
    But broadly, 46% to 48% is the right level at which to operate.

    — Akshat Seth

Market context

  • Parador EBITDA Profitability · FY26 · High confidence positive
    We should certainly hope for that. And I think we are internally planning for a better scenario than just EBITDA positive.

    — Akshat Seth

What to watch in Q1 FY26

Pipes B2G Business Recovery

next quarter
Current Soft demand due to delayed fund flows
Target Increased activity and order flows

Why it matters

Recovery in B2G is crucial for the Pipes segment's overall growth and profitability, especially for Crestia.

However, we remain optimistic about revival of this segment in FY'26 given the increased Government allocation and the activity in that segment.

Risks & concerns

  • Uncertain macroeconomic and weak demand scenario

    high

    Uncertain macroeconomic and weak demand scenario across India, Europe, and global markets made FY25 challenging.

    Management acknowledged

  • Price declines and margin pressures

    high

    Price declines by 2% to 5% across most product categories, and over 10% for Pipes due to PVC resin meltdown, placed significant margin pressures.

    Management acknowledged

  • Delayed fund flows in B2G business

    medium

    The institutional segment, especially driven by Jal Jeevan Mission, saw soft demand due to delayed fund flows from the Government side.

    Management acknowledged

  • Excess capacity and benign demand for PVC globally

    medium

    A big reason for the current reduction in PVC prices is that at a global level, there is a lot of excess capacity, and demand beyond India is benign.

    Management acknowledged

  • Intense competition and price erosion in Roofing

    medium

    Roofs business faced intense competition and price erosion that the segment saw in the market all of last year.

    Management acknowledged

Q&A highlights

5 direct
Pipes B2G business mix and future outlook Direct
If I look back at FY'25 aggregate portfolio of Pipes, about 75% B2C, 15% B2B, and 10% B2G. As we look ahead, I think the mix of 70% on B2C side and 30% on B2B plus B2G is how it should pan out as we go forward.

Clarifies the strategic shift in channel mix for the Pipes segment, indicating a planned increase in B2B/B2G contribution.

Asked by Parikshit Gupta

Outlook on PVC resin prices Partial
I think a specific time is a hazardous guess. There are 2, 3 factors to watch out for. Contrary to what you are describing, the antidumping duty for our relevant grades has still not been introduced. So, there is an industry-wide expectation that that should happen. When it happens, I think it's anybody's guess, but hopefully in the near term.

Highlights key factors (anti-dumping duty, BIS standards, global demand-supply) that could influence PVC prices, which are critical for Pipes segment margins, but acknowledges uncertainty on timing.

Asked by Parikshit Gupta

Pipes product mix between commoditized (UPVC) and value-added products Direct
But if I now aggregate and I also include the Crestia part of the portfolio, last year we were at about 30% of CPVC, and the PVC part was about 55%, 57%, and the remaining are value added products. So, things like tanks, things like electrofusion fittings, etcetera, constitute the remaining 10%. So, I would say between CPVC and value-added, we are still at about the 37% to 40% range, and that's the right mix for us to continue in our portfolio.

Provides a detailed breakdown of the Pipes product mix, emphasizing the company's strategy to maintain a significant share of higher-margin CPVC and value-added products.

Asked by Parikshit Gupta

Parador's target EBITDA margins compared to competitors Partial
That said, for us, the steady-state margin and if we start replicating the revenue numbers that we were doing pre-war situation is in the 8% to 10% range at an operating margin level. ... But when we exited, let's say, quarter 4 and the profitability that we have reported, quarter 4 was at a run rate of about EUR 160 million at an annualized level, EUR 40 million into 4. So, it's about EUR 160 million. And at that, the margins start looking positive around the 4% to 5% mark.

Explains the context for Parador's margins, differentiating between current performance and long-term targets, and linking margin expansion to higher revenue levels.

Asked by Parikshit Gupta

Inventory losses in Pipes division for Q4 Direct
We did, and you would recall, in this year, at an aggregate level, the price erosion has been north of 10%. And hence, yes, there were inventory losses to the tune of about Rs.15 crore at an aggregate level. ... Rs.15 crore for the full year, right? That's right.

Confirms the impact of price erosion on the Pipes division's profitability through quantified inventory losses for the full year.

Asked by Jiten Parmar

Breakup of the ₹48 crore PBT loss in the Pipes division Direct
Rajat, there is a depreciation because we have invested almost Rs.260 crore in Crestia. So, there is a depreciation on account of acquisitions plus depreciation on account of our organic investment, which we did in 2018 to 2020, that comes to around Rs.30 crore. And on top of it, there is a borrowing in Crestia book, which is part of this business, the interest amount will be around Rs.13 to 14 crore per year on this loan.

Provides a clear breakdown of the components contributing to the Pipes division's PBT loss, including depreciation from past investments and interest costs related to the Crestia acquisition.

Asked by Rajat Setiya

Demand outlook for B2G business post-elections Partial
I would say the expectation is picking up. Hopefully, the reality will follow soon. So, you are aware these kinds of things and especially in the B2G, what goes down takes a little bit of time to pick up. But the flurry of activities give fuel to the expectations that we are around the corner. In fact, in some segments in some states, there are orders flowing in.

Indicates early signs of recovery and positive expectations for the B2G segment, which was previously impacted by delayed government fund flows.

Asked by Rajat Setiya

Future revenue potential and turnaround for the Putty division Direct
On Putty, given the restructuring that's happening in the industry, from our perspective, it feels like a race to the bottom. What we are trying to do is to sustain and protect our niche as a value-added and a slightly premium product. So, in order to protect our margins and our price positioning, we are okay not chasing the volumes aggressively on that particular segment.

Clarifies the company's strategic shift in the Putty segment, prioritizing margins and niche positioning over aggressive volume growth, indicating a different growth driver (Construction Chemicals) for that portfolio.

Asked by Sai Ganesh

3 min read 6 chapters

Detailed narrative

Rebranding to BirlaNu and Strategic Vision

The company has rebranded from HIL to BirlaNu, reflecting a strategic evolution towards becoming a leading global provider of innovative, sustainable home and building solutions. This rebranding is central to a strong strategic push aiming to double sales over the next three years and inch closer to a $1 billion company. The growth strategy involves building scale in high-growth categories like Pipes, Construction Chemicals, and Designer Boards, expanding global footprint, playing across home and interior spaces, and strengthening B2C, B2B, and B2G channels.

FY25 Performance Amidst Macroeconomic Headwinds

FY25 was a challenging year due to an uncertain macroeconomic environment and weak demand, coupled with price declines of 2% to 5% across most product categories, and over 10% in Pipes. Despite this, the company focused on gaining market share in growth segments, agile cost management, and judicious long-term investments. Consolidated revenue grew 7% YoY to ₹3,615 crore, with an operating EBITDA of ₹88 crore. Q4 FY25 showed positive momentum with 9% revenue growth and 14% profitability improvement, signaling the impact of strategic initiatives.

Segmental Performance and Key Drivers

The Pipes segment delivered strong performance with 57% revenue growth and 76% volume growth for FY25, establishing BirlaNu as one of the fastest-growing players. Construction Chemicals recorded 23% revenue growth, crossing an annual run rate of ₹100 crore. The Roofing business maintained market share despite flat Q4 revenue of ₹254 crore due to pricing pressure. The Walls segment remained largely flat at ₹539 crore with 10% operating profitability. Parador demonstrated resilience with 7% revenue growth and 9% volume growth for FY25, achieving a positive EBITDA of EUR1.7 million in Q4.

Strategic Capacity Expansion and Product Innovation

BirlaNu doubled its AAC block capacity in Chennai to 4 lakh cubic meters per year, making it one of the largest facilities in India. A new state-of-the-art greenfield plant for OPVC pipes was commissioned in Patna, representing the next generation of pipe technology. The company also introduced an industry-first innovation using organic-based stabilizers in UPVC pipes, eliminating heavy metals and strengthening its sustainability credentials. The launch of Parador in India marks an important step into the home and interior space.

Profitability Challenges and Outlook

The Pipes division faced significant margin pressures due to PVC resin price volatility, resulting in ₹15 crore of inventory losses for FY25 and an overall PBT loss of ₹48 crore. The Crestia acquisition, while strategic, contributed to a ₹45 crore loss in the Pipes division for FY25 due to revenue decline from ₹330 crore (FY24) to ₹152 crore (FY25). Management aims for mid-teens operating margins for the new OPVC products and targets 8-10% operating margins for Parador at higher revenue levels (EUR165-175 million), while strategically not chasing aggressive volumes in the Putty business due to a 'race to the bottom'.

Capital Allocation and Debt Management

Total debt stood at ₹708 crore as of March 31, 2025, with a debt-equity ratio of 0.58x, primarily driven by the Crestia acquisition. Standalone debt was ₹295 crore, Parador debt ₹280 crore, and Crestia debt ₹130 crore. The planned capex for FY26 is approximately ₹200 crore, excluding any major inorganic or new plant investments. This capex will be allocated with approximately 40% to Pipes, 20% to Parador, 20% to Walls, and 20% to Roofs and Construction Chemicals, with specific projects like OPVC Phase 1 costing ₹35-40 crore and Building Blocks expansion ₹40-45 crore.

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