Buy Dalmia Bharat; target of Rs 2080: Geojit Financial Services

Geojit Financial Services research report on Dalmia Bharat

Dalmia Bharat Ltd. (DBL) is one of India’s largest cement companies, with a capacity of ~47MT; mainly focusing on South (17MT) and East & North East (29MT). Q2FY25 revenue declined by 2% YoY despite an increase in volumes of ~8% YoY due to a drop in realisation of 9% YoY. The cement prices declined during Q2 due to weak demand scenario owing to monsoons and an increase in the non-trade mix. EBITDA fell by ~26% YoY as EBITDA margin declined by 460bps YoY to 14.1% due to higher freight and other expenses. EBITDA/tonne fell by 32% YoY to Rs. 648. The company guides for Rs. 1,100- 1,200/tonne EBITDA over the long-term. DBL expects a reduction in costs of Rs. 150-200 per ton in the next 3 years by increasing renewable power, using captive coal mines, and reducing logistics costs. The acquisition of JP assets (9.4MT) has been halted due to JP’s insolvency proceedings under NCLT. This will delay the medium-term capacity target of 75MT by 1 year to FY28.

Outlook

We value at 12x Sept 2026E EV/EBITDA (2Yr avg=12x) and arrive at a target price of Rs. 2,080, maintain BUY rating considering expected improvement in cement price and recent correction in stock price.