Accumulate Dalmia Bharat; target of Rs 1827: Prabhudas Lilladher

Prabhudas Lilladher's research report on Dalmia Bharat

Dalmiabharat Cement (DALBHARA) posted Q1FY23 earnings below our estimates due to miss on costs. EBITDA declined 18% YoY to Rs5.9bn, below our estimates by 11%. But, it beat consensus estimates (CE) by 9%. DALBHARA’s EBITDA/t averaged Rs950/t in the last four quarters. We expect that margins would remain capped in range of Rs1,050-1,100/t in medium term due to unabated capacity addition and intense competition for market share in its core markets, East and South regions. However, we see these margins as highly competitive (with 15%+ CAGR volume growth in FY22-FY24e) in light of tough market conditions. Supported by efficient operations, strong capacity growth and comfortable valuations, we continue to like DALBHARA.

Outlook

Maintain Accumulate rating with TP of Rs1,827, EV/EBITDA of 11x FY24e.