Accumulate Dalmia Bharat; target of Rs 1755: Prabhudas Lilladher

Prabhudas Lilladher's research report on Dalmia Bharat

Dalmiabharat Cement (DALBHARA) posted better than expected Q4FY22 earnings on back of higher realisations. EBITDA declined 11% YoY to Rs6.8bn, above our/consensus estimates (CE) by 15%/29%. Aided by one-time deferred tax credit of Rs3.3bn in one of the subsidiary, Reported PAT declined 5% YoY to Rs5.94bn. Adjusted for the same, PAT declined 23% YoY to Rs2.64bn (PLe:Rs1.97bn, CE:Rs1.46bn). As expected, DALBHARA’s margins recovered QoQ due to unsustainable price levels and high input costs. However, we don’t expect material improvement in margins from current levels due to unabated capacity addition and intense competition for market share.

Outlook

We continue to like DALBHARA’s efficient operations, strong capacity growth and comfortable B/S. Maintain Accumulate rating with TP of Rs1,755, EV/EBITDA of 11x FY24e.