Birla Corporation Q1 Profit Slips as Lower Cement Prices and Higher Fuel Costs Weigh on Margins

Research Analyst: UJVIN NEVATIA (PROPRIETOR: NEVAT INVESTMENTS) | SEBI Registration No.: INH100009628

reported a 3.2% year-on-year decline in net profit to ₹115.7 crore for the first quarter of FY27, as lower cement price realisations and rising fuel and power costs weighed on profitability. Despite margin pressures, the company delivered healthy growth in revenue and cement sales volumes, reflecting resilient demand across key markets. Operating revenue increased 7.8% to ₹2,646.45 crore, while cement sales volume grew 5% year-on-year to 5.05 million tonnes, driven by stronger trade demand in states such as Maharashtra, Uttar Pradesh, Bihar, and Rajasthan. However, EBITDA per tonne declined 6% to ₹675, and the cement division's EBITDA margin fell by 110 basis points to 13.6%, primarily due to a 5% increase in fuel and electricity costs and continued pressure on cement prices amid intense competition. The company expects cement demand to improve after the monsoon season, supported by government infrastructure spending and private construction activity, while meaningful price recovery is likely only in the December quarter. Industry & Economic Impact: The results reflect the challenges facing India's cement industry, where strong sales volumes are being offset by pricing pressure and higher input costs. While infrastructure development and construction activity continue to support demand, intense competition has limited manufacturers' ability to pass on rising costs, resulting in margin compression. From an economic perspective, the expected recovery in cement demand after the monsoon aligns with increased government capital expenditure and private sector construction. A sustained improvement in infrastructure and housing activity would benefit cement producers, support industrial output, and contribute to employment generation and overall economic growth. Source: NDTV Profit No Recommendations