HDFC Securities gives ‘buy’ tag to this multibagger stock


HDFC Securities has given ‘buy’ tag to Birla Corporation shares despite multibagger return in 2021. According to brokerage, Q2FY2021-22 report by M P Birla group company is in line with the market expectations. In a detailed report, the brokerage firm advised stock investors to buy this multibagger stock for the medium to long-term target of 1634 per share levels.

Highlighting the reason for being bullish on this Birla group stock; HDFC Securities research report says, “Birla Corporation reported broadly in-line performance in Q2FY22. Weak offtake across some of its major markets muted its consolidated revenue growth to 3 per cent YoY, with revenue at 17bn. Higher energy and packing costs elevated opex, reducing EBITDA/APAT by 30/49 per cent YoY to 2.67/0.86bn respectively. A weak Q2 also flattened H1FY22 EBITDA and WC stretch lowered OCF by 23 per cent YoY to 4.6bn. Its net debt remained flat at 35bn (vs Mar’21).”

The brokerage report went on to add, “We continue to like BCORP (Birla Corporation) for its large retail presence in the lucrative north/central regions and various cost-cutting initiatives. The recently commissioned clinker debottlenecking by 0.6mn MT in the north and upcoming 3.9mn MT greenfield plant in Maharashtra should accelerate volume growth.”

Highlighting the reduction in debt of the company, HDFC Securities report says, “While a weak Q2 flattened H1FY22 EBITDA YoY, OCF fell 23 per cent YoY to 4.6bn on WC stretch. BCORP (Birla Corporation) used this cash to fund its ongoing Capex, while also reducing its gross debt by 1bn (vs Mar-21) to 40.5bn. Net debt remained flat at 35bn, leading to a flat net debt/EBITDA ratio of 2.5.” The report went on to add that BCORP (Birla Corporation) is also aiming to augment its captive coal mining H2FY22 onwards.

On its suggestion to stock market investors in regard to this multibagger stock, HDFC Securities report says, “We maintain our BUY rating on Birla Corporation (BCORP) with an unchanged target price of 1,634/share (8.5x Sep’23E consolidated EBITDA).”

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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