Buy Dalmia Bharat; target of Rs 2660: Motilal Oswal

Motilal Oswal is bullish on Dalmia Bharat has recommended buy rating on the stock with a target price of Rs 2660 in its research report dated October 17, 2025.

Broker Research

October 23, 2025 / 10:18 IST

BUY

26 Aug, 2025 12:21

Volume

Todays L/H

Motilal Oswal's research report on Dalmia Bharat

Dalmia Bharat’s (DALBHARA) 2QFY26 operating performance was broadly in line with estimates. EBITDA grew ~60% YoY to INR7.0b (in line). EBITDA/t increased 56% YoY to INR1,009 (vs. estimate of INR980). OPM expanded 6.3pp YoY to ~20% (1pp above our estimate). PAT grew ~329% YoY to INR2.4b, albeit on a low base (~11% above our estimate, aided by higher other income and lower ETR). Management indicated that the GST rate cut has been passed on to consumers and remains optimistic about pricing stability going forward. Demand in 1H was soft due to heavy rains and the GST transition, which led to deferred purchases. However, the company expects demand to recover in 2H. On the cost front, the recent rise in petcoke prices and INR depreciation are expected to exert some cost pressure. However, the company remains focused on reducing variable costs. Capacity expansion at Belgaum and Kadapa is progressing as planned, supporting future growth.

Outlook

We estimate a volume CAGR of ~6% over FY25-28 and an EBITDA/t of INR1,090/ INR1,170/INR1,211 in FY26/FY27/FY28E vs. INR820 in FY25E (avg. EBITDA/t of INR1,013 over FY21-25). At CMP, the stock is trading attractively at 11x/10x FY27E/FY28E EV/EBITDA and USD88/USD83 EV/t. We value DALBHARA at 13x Sep’27E EV/EBITDA to arrive at our TP of INR2,660. Reiterate BUY.

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