Motilal Oswal has issued a buy rating on Birla Corporation with a target price of Rs 1,220 in its research report dated July 26, 2026. According to the brokerage's analysis, the stock is currently trading at attractive valuations despite recent operational challenges. The recommendation is based on the company's long-term growth prospects and reasonable valuation metrics.
Birla Corporation's first quarter FY27 results showed mixed performance with revenue growing 7.4% year-on-year to ₹2,669 crore from ₹2,486 crore in the previous year. However, EBITDA declined 3.6% to ₹365 crore and net profit slipped 3.3% to ₹116 crore compared to ₹120 crore in Q1 FY26. The operating profit margin dropped 110 basis points to 13.6%, significantly below expectations. Cement sales volume rose 5.4% year-on-year to 5.05 million tonnes, supported by healthy demand from trade channels in Maharashtra, Uttar Pradesh, Bihar and Rajasthan. EBITDA per tonne fell 5.6% to ₹675, compared to the estimated ₹801, while realisation improved 1.8% to ₹4,947 per tonne.
The company faced significant cost pressures during the quarter, with rising power and fuel costs weighing on margins. To address these challenges, Birla Corporation increased its renewable power share from 31% to 33% and commissioned a 5 MW solar power plant at Mukutban, which is expected to reduce carbon dioxide emissions by around 5,000 tonnes annually. The jute business continued to face headwinds with production declining 27% year-on-year due to record-high raw jute prices and supply shortages, though higher domestic and export sales helped Birla Jute Mills report a cash profit of ₹4.28 crore.
Birla Corporation continued to strengthen its premium product portfolio during the quarter. Eco-friendly blended cement accounted for around 88% of total sales, while premium-grade cement accounted for 62% of sales and premium cement volumes increased by 18% compared with the previous year. The company's most popular product line, 'Perfect Plus', recorded 24% higher sales. Capacity utilisation remained high at 98% with sales through the trade channel increasing to 82% of total volumes from 78% a year ago.
Looking ahead, Birla Corporation expects cement demand to remain subdued until the monsoon season ends, with recovery likely from September as government infrastructure spending and private construction activity gather pace. The company anticipates cement demand to recover from September as economic activity normalizes. Birla Corporation currently trades at 6.1x/5.4x FY27E/FY28E EV/EBITDA, which is below its long-term one-year forward average EV/EBITDA of 8.4x. According to Motilal Oswal's analysis, the stock is valued at 7x FY28E EV/EBITDA to arrive at the target price of Rs 1,220. The brokerage has reiterated its buy recommendation based on this attractive valuation relative to historical averages.
