Accumulate Dalmia Bharat; target of Rs 2073 Prabhudas Lilladher

Prabhudas Lilladher's research report on Dalmia Bharat

Dalmia Bharat (DALBHARA) reported weak performance in Q2FY25 led by sharp fall in average realization and higher other costs. Average NSR declined sharp 6% QoQ as cement prices weakened the most in East and South regions (5-7% QoQ) and trade mix declined to 63%. Volumes grew 8.4% YoY as the company continued to supply the central region from its plants in eastern region. Going forward, as cement demand improves in H2, we expect performance to improve aided by better pricing and volumes. As current capacity utilization is below 60%, near-term volume growth is not a concern. The company will continue to supply material to the fast growing central region from its eastern plants through the dealer network created, which may weigh on freight costs. Mgmt reiterated its medium-term target of reaching 75mtpa by FY28E and would announce its capex plan in the next 9 months.

Outlook

We expect revenue/EBITDA/PAT CAGR of 11%/14%/21% over FY24-27E. As we reduce capex assumptions, EPS gets upgraded. At CMP, the stock is trading at 10.4x/9.3x EV of FY26E/FY27E EBITDA. We maintain ‘ACCUMULATE’ rating with TP of Rs2,073 valuing at 11x EV of Sep’26E EBITDA.