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Buy Dalmia Bharat; target of Rs 1915: Motilal Oswal

Motilal Oswal is bullish on Dalmia Bharat recommended buy rating on the stock with a target price of Rs 1915 in its research report dated May 10, 2022.

May 12, 2022 / 02:33 PM IST

"India’s specialty chemicals industry is a decadal growth opportunity and it is still not too late to participate in the value creation process. We prefer CRAMS/CSM players Navin Fluorine (Navin) and PI Industries (PI) as they provide long-term earnings visibility. We also like UPL due to robust growth outlook and reducing debt concerns and SRF due to rising contribution from the chemicals business," JM Financial research report.

 
 
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Motilal Oswal's research report on Dalmia Bharat


Dalmia Bharat (DALBHARA)'s 4QFY22 performance was above our estimates primarily driven by better realization (4% above estimates). EBITDA was at INR6.8b v/s estimated INR5.3b and OPM was at 20.2% v/s estimated 16.8%. However, higher costs (up 10% YoY) continued to impair margins (OPM dipped 4.2pp YoY and EBITDA/t was down 13% YoY). We cut our FY23E/ 24E EBITDA by 2%/4% considerindg higher energy costs. This along with likely higher interest expenses leads to our EPS reduction of 11%/4% in FY23E/24E, respectively. We like the stock owing to its growth plans, locational advantage in East India and cost reduction measures.



Outlook


We maintain our BUY rating with a TP of INR1,915 (v/s INR2,000 earlier), based on 12x FY24E EV/EBITDA.

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first published: May 12, 2022 02:33 pm
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