Birla Corp trims FY24 volume guidance on tepid demand in some markets

Birla Corporation, flagship company of the MP Birla Group, has trimmed its volume guidance for the current financial year (FY24) to 13% from 15% due to tepid market conditions.

Though the demand from infrastructure and commercial segments continues to be strong, the housing sector, especially rural housing is subdued in some of the markets, the company's Chief Financial Officer, Aditya Saraogi, told CNBC-TV18.

The Kolkata-based company, however, retained its guidance for earnings before interest, tax, depreciation, and amortisation (EBITDA) at ₹850 per tonne for FY24 despite some pressure on realisations.

The EBITDA per tonne for the third quarter was around ₹903 per tonne and for the first nine months of FY24 (9MFY24) it was ₹749 per tonne. This means the company will have to earn an EBITDA of ₹1,050-1,100 per tonne in the fourth quarter (Q4FY24).

Saraogi believes the EBITDA per tonne target is achievable as the new cement plant at Mukutban in Maharashtra is increasingly contributing to the profitability, with costs declining and volumes ramping up.

The improvement in EBITDA is also a result of cost saving programme that the company has initiated, which has been in the range of ₹16-17 per tonne. “We expect another incremental ₹20-30 per tonne in the next quarter,” he said.

The Mukutban plant is eligible for fiscal incentives for 20 years, which Saraogi expects to begin accruing from the fourth quarter this year (Q4FY24).

The Kolkata-based company reported consolidated net profit of ₹109 crore in the third quarter of the year (Q3FY24) versus net loss of ₹50 crore in the same quarter last year. Consolidated revenue grew nearly 15% year-on-year (YOY)  to ₹2,312 crore from ₹2,016 crore.

Birla Corporation has a net debt of ₹3,470 crore as of December and expects to close below ₹3,400 crore in Q4FY24 keeping the net debt to EBITDA ratio below a sustainable 3x level.

The market capitalisation of Birla Corporation is ₹11,687 crore.