This cement stock rallies 26% in 2 days after Q4 results beat estimates. Should you chase the rally?

Stocks to buy: Domestic brokerage firms have raised their target prices on Birla Corporation shares, impressed by the company’s turnaround performance in the March quarter (Q4FY25), which beat estimates across all key parameters. Volume, revenue, EBITDA, and PAT grew by 8%, 6%, 13%, and 33% YoY, respectively.

This strong performance, coupled with new capacity additions, the company’s entry into the ready-mix concrete (RMC) segment, and improved debt levels, is expected to boost profitability. Birla Corporation reported a profit of ₹257 crore, up from ₹193 crore in the previous year. Notably, the cost per tonne declined 4% YoY and 3% QoQ to ₹4,345 per tonne.

Meanwhile, the company's stellar performance was also well received by the Street, as Birla Corporation's share price jumped another 5.20%, following a 20% surge on Monday, taking the two-day cumulative gain to 26.20%.

JM Financial lifted the target price to ₹1,600

JM Financial raised its target price on the stock to ₹1,600 from ₹1,460 while maintaining a 'Buy' rating. "Birla Corporation’s Q4FY25 consolidated EBITDA increased 13% YoY and 2.2x QoQ to a record ₹5.3 billion, sharply beating our and consensus estimates by over 30%, driven by better-than-expected realizations," said JM Financial.

This resulted in a healthy rise in EBITDA/tonne to ₹1,017 (+4% YoY, +85% QoQ), beating JM Financials' forecast of ₹780. Net debt declined by ₹8 billion YoY to ₹22.4 billion as of March 2025.

With improving profitability and lower leverage, the company announced expansion plans to increase cement capacity by 30% to 27.6 million tonnes by FY29 (8% CAGR), with a capex outlay of ₹4,330 crore—addressing investor concerns on volume growth.

The company also forayed into the ready-mix concrete (RMC) business in Q4, starting with promising results in the Uttar Pradesh market. It now plans to scale up operations, with the RMC venture expected to support sales of its premium cement products.

Additionally, the term of Mr. Sandip Ghose, Managing Director & CEO, has been extended by three years, starting January 26. Factoring in the Q4 beat and improved profitability outlook, JM Financial has revised its FY26–27E EBITDA estimates upward by 6–8%.

Axis Securities revised the target price higher to ₹1,560

Meanwhile, Axis Securities has also reiterated its ‘Buy’ rating and raised the target price to ₹1,560 from ₹1,340. The stock is currently trading at 8x and 7x FY26E/FY27E EV/EBITDA and at an EV/tonne of $71 and $63, respectively, which Axis finds attractive.

The company has announced plans to increase its cement production capacity to 27.6 MTPA by FY28–29, a 38% rise from current levels. In the near term, a 1.4 MTPA expansion at the Kundanganj plant will be operational in Q2FY26, supporting volume growth alongside the ramp-up of the Mukutban unit.

Factoring this, the brokerage project volume, revenue, EBITDA, and PAT growth of 7%, 9%, 21%, and 44%, respectively, over FY25-FY27E. Cement demand is expected to remain strong, driven by government initiatives. Pricing, however, remains a key variable to watch.

Birla Corporation share price trend

Birla Corporation’s share price struggled after hitting its all-time high of ₹1,802 apiece in February 2024, ending 8 out of the following 12 months in the red and losing 46% of its value due to weak financial performance.

However, the stock rebounded in March with an 8% gain, and the rally extended into May, with the stock up 24% so far.

Birla Corporation Limited, part of the MP Birla Group, was incorporated in 1919 as Birla Jute Manufacturing Company Limited. The company has interests in both cement and jute goods.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.