HDFC Securities maintains 'Add' on Birla Corp; flags near-term volume dip

HDFC Securities has lowered its Ebitda estimates for Birla Corp for FY26-28E by 6 per cent, 9 per cent and 4 per cent, respectively, to account for near-term pricing pressure in Q3FY26

Brokerage firm HDFC Securities has maintained its ‘Add’ rating on the Birla Corporation stock, citing industry-leading volume growth, a rising premium cement mix that supports pricing resilience, and improving cost competitiveness, even as it flags near-term demand moderation and higher competition.

 

The brokerage has lowered its Ebitda estimates for Birla Corp for FY26–28E by 6 per cent, 9 per cent and 4 per cent, respectively, to account for near-term pricing pressure in Q3FY26, lower incentive accruals from Q3FY26 onwards, and moderated volume assumptions amid rising competition. 

 

Analysts expects volumes to grow at a 4 per cent CAGR over FY25–28E, with margins recovering to around ₹780 per tonne in FY27–28E from ₹675 per tonne in FY25, on the back of operating leverage and cost efficiencies. Capex is projected at ₹6.5 billion in FY26E before ramping up from FY27E with planned expansions, while the phased pace should keep the balance sheet comfortable, with net debt to EBITDA below 2.0x. 

 

 

HDFC Securities has rolled forward its valuation to March 2028 from September 2027. It has revised the target price from ₹1,450 to ₹1,370 per share, based on 8x March 2028 consolidated Ebitda. The target price implies a potential upside of nearly 30 per cent from the January 8, 2026, closing price of ₹1,057.30 on the NSE.

 

At 12:15 PM, shares of Birla Corporation were trading flat at ₹1,058.30. The stock touched an intraday high of ₹1,067.8 on the NSE. In comparison, the benchmark NSE Nifty 50 was quoting at 25,744.55 levels, down by 132.20 points or 0.5 per cent. Birla Corporation has a total market capitalisation of ₹8,149.48 crore. 

Here’s why HDFC Securities remains positive on Birla Corporation:

Subdued demand and pricing in Q3FY26: Birla Corp reported an 8 per cent year-on-year (Y-o-Y) volume growth in H1FY26. However, cement demand in its key markets has remained muted at low single-digit levels in Q3FY26, according to company commentary. 

 

Analysts at HDFC Securities expect this to weigh on volumes, given the company’s largely trade-focused sales mix, and estimate a nearly 3 per cent Y-o-Y decline in Q3FY26 volumes amid intensifying competition. Net sales realisation is also likely to soften by around 2 per cent quarter-on-quarter (Q-o-Q) due to weaker pricing, partly offset by easing input costs, resulting in unit Ebitda moderating to about ₹580 per tonne in Q3FY26 from ₹712 per tonne in the preceding quarter.

 

Focus on premiumisation and green power: Birla Corp continues to lead the industry in premium cement penetration, with premium sales accounting for 59 per cent of trade volumes in H1FY26, up from 51 per cent in FY22, a mix the company expects to sustain. This, along with faster growth in its flagship Perfect Plus brand, provides a key margin buffer amid rising competition, the brokerage said in its note. 

 

In parallel, green power usage is set to rise to about 32 per cent in H2FY26 from 24–26 per cent in FY24–25, aided by the start of 6 MW renewable supply at the Chanderia plant from October 2025. Additionally, the Bikram captive coal mine is expected to become operational by the end of FY26, with meaningful output from FY27, supporting further cost efficiencies alongside the existing Sial Gogri mine.

 

Measured foray into RMC: According to HDFC Securities, the company is taking a cautious approach to its entry into the ready-mix concrete (RMC) segment, with operations currently limited to two locations, Lucknow and Ayodhya, under the premium Perfect Plus brand. The company is focusing on value-added and differentiated RMC products instead of scale-led commoditised offerings, a strategy that should help mitigate intense competition from smaller players and support margin discipline in the early phase of expansion, the brokerage said in its note.

 

Cement capacity expansion: The company is on track to raise its cement capacity to 27.6 million tonnes by FY29, around a 40 per cent increase. This includes a 1.4 million tonne unit at Kundanganj by end-FY26, followed by around 6.2 million tonnes across Bihar and Uttar Pradesh, along with a 3.7 million tonne clinker addition at Maihar in FY28–29. The company has guided for a capex of about ₹8 billion in FY26, of which ₹2.3 billion was already spent in H1FY26.