Buy Dalmia Bharat; target of Rs 2,250: Sharekhan

Sharekhan is bullish on Dalmia Bharat has recommended buy rating on the stock with a target price of Rs 2,250 in its research report dated July 19, 2024.

Broker Research

July 22, 2024 / 13:02 IST

Buy

26 Aug, 2025 12:21

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Sharekhan's research report on Dalmia Bharat

In Q1FY2025, Dalmia reported in-line consolidated revenue, while it positively surprised on operational profitability, led by higher-than-estimated realisations and cost reversal. Management has retained its volume growth guidance of 12% y-o-y for FY2025, outpacing the estimated industry growth rate of 8% y-o-y. Operating costs are targeted to reduce by Rs. 150-200 per tonne over a threeyear period. JP Associates’ insolvency comes in as a negative surprise, delaying the medium-term capacity target of 75 mtpa by one year to FY2028. The company remains committed to 110-130 mtpa capacity by 2031.

Outlook

Dalmia is expected to benefit from a strong demand environment while focusing on capacity addition plans. However, weak cement prices in the eastern and southern regions are expected to weigh on operational profitability in the near term. Further, the company suffered a setback in the acquisition of JP Assets, which has also delayed its medium-term capacity target of 75 mtpa by a year. The company’s focus remains on maintaining its market share while gradually improving upon cost efficiencies. Dalmia is currently trading at an EV/EBITDA of 13x/11x its FY2025E/FY2026E earnings. We retain our BUY rating on the stock with an unchanged price target (PT) of Rs. 2,250, considering its industry-leading volume growth and improving cost structure over the next 2-3 years.

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