India Ratings and Research (Ind-Ra) has reaffirmed the 'IND AA/Stable' rating on Birla Corporation Limited's (BCL) bank loan facilities, which amount to ₹2,500 million. Additionally, Ind-Ra has assigned an 'IND AA/Stable' rating to new bank loan facilities worth ₹1,281.5 million. The rating agency has also withdrawn the rating for the company's non-convertible debentures (NCDs) following their full redemption on February 28, 2025.

The affirmation of the credit rating reflects Birla Corporation's robust financial profile, strong market position, and strategic initiatives aimed at enhancing operational capabilities. BCL's strong business profile is supported by its significant presence across multiple regions in India. The company ranks among the top ten cement manufacturers in the country, with a total installed capacity of 20 million tonnes per annum (mtpa). BCL holds a prominent position in Central India, commanding a capacity share of approximately 10%, and is also a key player in the West, East, and North markets.

Birla Corporation has consistently maintained a high-capacity utilization rate, achieving around 90% in FY25, which is significantly above the industry average of 65%-70%. This reflects the company's focus on geographical diversification and operational efficiencies.

The company is currently undertaking expansion plans to increase its cement capacity by 7.6 million tonnes over the FY26-FY29 period. These expansions are expected to support medium-term growth and improve operational efficiencies. Furthermore, BCL is developing captive coal blocks and limestone mines to reduce its reliance on external sourcing and improve cost efficiency over time.

In FY25, Birla Corporation's standalone net leverage remained healthy at 0.6x, consistent with FY24. The interest coverage stood at 4.0x, despite a decrease in EBITDA to INR4.0 billion from INR5.4 billion in the previous year. The company's revenue for FY25 was INR52 billion, compared to INR57 billion in FY24.

After experiencing a year-on-year decline in the first three quarters of FY25, Birla Corporation's EBITDA per metric ton (mt) improved to INR1,027/mt in the fourth quarter of FY25, compared to INR974/mt in the same period last year. This positive trend continued into the first quarter of FY26, with EBITDA/mt remaining higher year-on-year at INR722/mt, compared to INR590/mt in the first quarter of FY25. India Ratings expects the improved profit margins and volume growth to increase BCL's consolidated EBITDA in FY26, following a decrease in FY25 to INR12.2 billion from INR14.4 billion in FY24.

Despite a strong EBITDA generation at subsidiary RCCPL (formerly Reliance Cement Company Private Limited), BCL's consolidated EBITDA/mt was affected by the relatively high-cost structure of some older plants. RCCPL's EBITDA/mt stood at INR929 in FY25, compared to INR1,099 in FY24. Consequently, the net leverage (net debt/EBITDA) decreased to 1.8x in FY25 from 2.1x in FY24 and 4.7x in FY23, while the gross interest coverage (EBITDA/gross interest expense) remained stable at 3.7x.

Birla Corporation plans to invest INR60 billion–65 billion over FY26–FY29 to expand its cement and clinker capacity and improve operating efficiencies, including sustenance capex. Despite the large capital expenditure, Ind-Ra believes that BCL's consolidated net leverage is unlikely to exceed 2.5x over the near to medium term.

India Ratings anticipates cement demand to grow by 5%-7% year-on-year in FY26, driven by a recovery in infrastructure activity and robust rural housing demand supported by a favorable monsoon and improving real wages. As a result, after muted 2% year-on-year growth in FY25, Ind-Ra expects BCL's volume growth to improve to a high single digit in FY26.