Introduction: A Strong Finish to FY25

In the ever-evolving cement industry, Birla Corporation stands out with a robust strategy to tackle market challenges. As of March 2025, the company is riding a wave of optimism, with cement demand firming up and prices recovering. Analysts maintain a BUY rating on Birla Corporation (BCORP), setting a target price of INR 1,490 per share. This confidence stems from a projected 6-8% year-over-year (YoY) volume growth in H2FY25, alongside margin improvements and ambitious expansion plans.

Cement Demand and Pricing: A Turnaround in Q4FY25

The cement sector is buzzing with activity, and Birla Corporation is at the forefront. Management reports that demand has strengthened across all operational regions in Q4FY25. Despite minor disruptions in Uttar Pradesh due to the Mahakumbh, sales in the central region have been particularly strong.

The numbers tell the story: Birla Corporation is on track to achieve 7% YoY volume growth in Q4FY25, a significant leap from -3% in H1FY25 and 7% in Q3FY25. This translates to a 15% quarter-over-quarter (QoQ) surge. Cement prices have also bounced back QoQ, paving the way for a ~INR 150 per metric ton (MT) margin boost in H2FY25 compared to H1FY25.

At its Mukutban facility, operations are scaling up impressively, with over 40% of cement sold as premium products. This focus on premiumization is a key driver of profitability.

Cost-Saving Strategies: Building a Leaner Future

Birla Corporation isn’t just banking on demand—it’s slashing costs to widen margins. Fuel costs for FY25E are expected to drop by ~INR 100/MT YoY due to cooling landed fuel prices. Looking ahead, the company is ramping up its use of low-cost green power, aiming for a 35% share by FY26’s end, up from 24-26% in FY24-25. This shift could save ~INR 35/MT in power costs by FY27E.

Captive coal is another game-changer. The Bikram coal mines (0.3 million MT per annum) will start by FY26’s end, followed by Marki Barka (1 million MT per annum) by mid-FY28E. By late FY27, captive coal usage could double to ~30% from 15% in FY25, cutting fuel costs by an additional ~INR 40/MT. Over FY24-27E, variable costs are projected to fall by ~INR 175/MT.

Logistics savings via Project Unnati add another ~INR 25-30/MT to the mix, bringing total operating cost reductions to ~INR 200/MT by FY27E.

Expansion Plans: Aiming for 25 Million MT by 2027

Birla Corporation is doubling down on growth. Its brownfield split grinding unit (SGU) expansion (Line-3) in Kundanganj is set to go live by Q1FY26. The company has its sights set on a 25 million MT cement capacity by 2027, including a 3 million MT clinker expansion in Maihar, Madhya Pradesh, and two SGUs in Uttar Pradesh and Madhya Pradesh (1.5 million MT each).

Capital expenditure (Capex) is picking up pace, with INR 5bn earmarked for FY25E—INR 3bn already spent in the first nine months. Expect even bigger investments from FY26 onward.

Financial Outlook: Steady Growth Ahead

While volume growth is modest at a 4% CAGR over FY24-27E, profitability is set to soar. Thanks to cost cuts and better cement pricing, unit EBITDA is expected to climb to INR 857/MT in FY27E, up from INR 616/MT in FY25E.

Debt levels are also under control. Net debt to EBITDA is projected to peak at 2.6x in FY25E before easing to 1.6x by FY27E as expansion slows. The stock’s valuation at 8x FY27E consolidated EBITDA supports the INR 1,490/share target, aligning with its historical 5- and 10-year averages and implying a replacement value of USD 74/MT on FY26E.

"We're on a solid path to recovery and growth," a company spokesperson noted, echoing the positive sentiment.

Conclusion: A Bright Horizon for Birla Corporation

Birla Corporation is more than holding its own—it’s carving a path to leadership in the cement industry. With demand and pricing on the upswing, smart cost management, and bold expansion plans, the company is poised for a strong future. As it targets 25 million MT by 2027 and bolsters profitability, Birla Corporation remains a compelling story for investors and industry watchers alike. Keep an eye on this cement giant!