Buy Dalmia Bharat; target of Rs 1450: HDFC Securities

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26 Aug, 2025 12:21

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HDFC Securities' research report on Dalmia Bharat

During 4QFY19, Dalmia delivered earnings recovery, as consolidated net sales /EBITDA/PAT grew by 7/5/46% YoY to Rs 28/6.1/1.9bn respectively, after posting decline in the preceding three quarters. Sales volume rose 8% YoY (+25% QoQ) to 5.6mn MT, led by strong growth in south and NE regions, while high utilization at its eastern plants slowed the growth. Overall utilization rose to 89% vs 83/72% YoY/QoQ. Blended NSR increased 4% QoQ. Strong QoQ price recovery in the south markets (40% of total sales), amid marginally weak pricing in east/NE region drove ~200bps NSR gain. Additionally, both incentives and non-cement revenue increased QoQ which added ~200bps to the NSR increase. Opex fell 1% QoQ, benefitting from decline in energy prices, operating leverage gains and rising cost controls. On YoY basis, the cost controls offset energy inflation impact.

Outlook

We recommend BUY on Dalmia Bharat with a TP of Rs 1,450 (12x FY21 consolidated EBITDA). In 4QFY19, Dalmia sustained its superior margin (EBITDA at Rs 1,092/MT, despite high energy costs and lower incentives YoY). The co also continued to pare off debt, despite large capex.

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