Accumulate Dalmia Bharat; target of Rs 2273: Prabhudas Lilladher

Prabhudas Lilladher's research report on Dalmia Bharat

Cement demand remains muted especially in the key Eastern region where demand is struggling over last 5 quarters. Despite regime change in Odisha and upcoming elections in West Bengal, demand remained muted in last few months. East region prices improved in Apr/May along with other regions by ~Rs20/bag and got cut by Rs5 in June due to early monsoon however current prices are still Rs10-15 higher than Q4FY25 average. Southern region demand is better than East but now affected by early monsoon and flood like situation in few regions. Prices improved by Rs50/bag in Apr/May and rolled back by Rs5-10 due to monsoon led weakness in demand. We expect near-term performance to remain strong led by higher pricing and flattish cost structure which would translate into ~Rs200-250 QoQ increase in EBITDA/t from Rs926 levels of Q4FY25.

Outlook

We expect DALBHARA to deliver Revenue/EBITDA/PAT CAGR of 14%/30%/58% over FY25-27E on low base of FY25. At CMP, the stock is trading at 11.9x/10.2x EV on FY26/27E EBITDA. Maintain ‘Accumulate’ rating with revised TP of Rs2,273 (Rs2,117 earlier) valuing the company at 11x EV/Mar’27E EBITDA.

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