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Motilal Oswal Report
Birla Corporation Ltd.’s operating profit was largely in line as a higher-than-estimated cost was offset by greater volume and realisation.
Ebitda/tonne, at Rs 653, was 8% below our estimate. Higher other income (up 5.1 times YoY) aided the beat in adjusted profit at Rs 1.4 billion (our estimate: Rs 852 million).
Cost pressures continue to impact profitability as operating profit margin dropped 6.2% YoY and Ebitda/tonne fell 31% YoY.
The management remains cautious on near-term industry growth and its margin prospects, considering higher inflation and energy costs.
We reduce our FY23/FY24 earnings per share estimate by 9%/4%.
Though near-term challenges prevail in the industry, we remain optimistic about its demand prospects and expect Birla Corp to benefit from the newly commissioned Mukutban plant (Maharashtra).
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