Aditya Birla Real Estate

Driven by a very good growth in topline, reduced depreciation on account of change in method, increased other income and a tax write back, this Aditya Birla group of company posted an exuberant 74% jump in net profit for Q1FY15 at Rs.66 crore; sequentially, it is a turnaround story from a loss of Rs.5 crore. Net sales of the company came in pretty robust at Rs.1839 crore, up 17% (YoY). This was led mainly by cement, which posted net revenue of Rs.1008 crore, which is 55% of the total net sales. EBIT of cement though dropped to Rs.97 crore, down 10% and drop in its margin was sharper at 9.6% v/s 12.87% in previous Q1. On the other hand, textiles did well on the topline, with a 9% jump at Rs.430 crore but here too, EBIT fell 6% and EBIT margin fell to 7.57% from 8.63%. The good news is that its pulp and paper segment turned around with an EBIT of Rs.22 crore compared to loss of Rs.5 crore in previous Q1 and loss of Rs.2 crore in Q4. Thus topline and bottomline in current Q1 was led, like most of the times by cement.

This company, as explained by our Editor, SP Tulsian, is no longer a textile company, it is more of a realty and cement play. In realty, we are looking at a land bank in prime Mumbai area of around 40 acres and this is expected to fetch the company recurring income on a continuous basis once they complete developing property there over the next 1-2 years.  In cement, the company has four cement plants at different locations, with a total cement manufacturing capacity of 10 million tonnes per annum. The company is in the process of increasing capacity to 12.8 million tonnes per annum by September 2014, after completion of its expansion plan. Given its market cap of around Rs.5900 crore and debt of Rs.4500 crore, enterprise value works out to Rs.10,400 crore. It’s a pure asset play.