Buy Dalmia Bharat; target of Rs 2300: Motilal Oswal

Motilal Oswal's research report on Dalmia Bharat

Dalmia Bharat (DALBHARA)’s 4QFY24 EBITDA declined 7% YoY to INR6.5b (18% miss), while EBITDA/t stood at INR743 (vs. estimated INR965). Adj. Profit (after MI) was in line at INR2.5b (down 3% YoY), due to higher other income (up 2.9x YoY). Management expects the cement price to remain soft in 1HFY25, amid the impending general elections followed by monsoons. It believes that price recovery can happen only in 3QFY25. Focusing on brand-building activities led to higher marketing expenses. The acquisition of JPA’s cement assets is taking longer than expected due to procedural delays; however, management expects the process to be completed by 2QFY25. Further expansion plans are under discussion, and it will take a few more quarters to provide more details on the same.

Outlook

We reiterate our BUY rating with a revised TP of INR2,300 (earlier INR2,500). The completion of the acquisition of JPA’s cement assets and the clarity of expansion plans will be the key triggers for stock performance.