Dalmia Bharat (Dalmia) reported in-line consolidated revenues at Rs. 2577 crore (up 11.4% y-o-y) led by volume growth of 6.3% y-o-y and blended realization growth of 4.9% y-o-y. It positively surprised on EBITDA/tone which stood at Rs. 1218 mainly led by sequential decline in power & fuel and freight costs despite increase in pet coke/ coal price and diesel prices. Hence, operating profit/adjusted net profit at Rs. 621 crore/ Rs. 217 crore were much higher than our estimates. The company expects demand and cement prices to improve in east in H2. It is on track to reach 48.5MTPA cement capacity by March 2024 from current 33MTPA.
Dalmia Bharat has addressed its medium and long-term growth plans through its decadal capital allocation plan, which would ensure a more predictable, sustainable, and profitable growth path going ahead. The company would be focusing on achieving 14-15% RoCE over the next few years and maintain its balance sheet quality. Dalmia is currently trading at an EV/ EBITDA of 12x/10x its FY2023E/FY2024E earnings, which we believe leaves room for further upside, considering its strong earnings growth trajectory over the next three years. Hence, we retain Buy with an unchanged price target (PT) of Rs. 2,601.
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