Accumulate Dalmia Bharat; target of Rs 1000: Geojit

Geojit's research report on Dalmia Bharat

Q2FY21 revenue grew by 8%YoY mainly aided by improvement in volumes (+7%ToY). EBITDA grew by 48%YoY due to sharp improvement in EBITDA margin by 790bps YoY to 29% aided by reduction in costs. EBITDA/Ton improved to Rs.1,463 Vs Rs.1,063 YoY (Rs.1,678 QoQ). The capacity expansion of ~7.8MT in East is on track with slight delay due to lockdown restrictions. ~3.35MT would be completed in FY21 and balance in FY22. DBL has completed acquisition of Murli Industries (3MT-Maharashtra) with a consideration of Rs.410cr. Additional ~Rs.400 cr would be spend to operationalize the plants in 9-12 months. Demand outlook remains uncertain in the short-term but to recover strongly in FY22. We value DBL at 8x FY22E EV/EBITDA.

Outlook

Dalmia Bharat Ltd (DBL) is the fourth largest cement company in India with a capacity of ~26.1MT, focusing in South with 13.2MT and East & North-East with 12.9MT. We revise upward our Target to Rs.1,000 (earlier Rs.865) and maintain Accumulate rating considering strong margins and healthy volume.

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