Buy Dalmia Bharat; target of Rs 2120: Motilal Oswal

Motilal Oswal's research report on Dalmia Bharat

DALBHARA’s 3Q performance was supported by the pricing recovery in the East region and better cost controls (opex/t down 4% QoQ). EBITDA came in at INR6.4b v/s estimated INR6b and EBITDA/t stood at INR1,022 v/s estimated INR950. Profit came in at INR2.0b v/s estimated INR1.7b. It has signed a definitive agreement (part of the earlier announcement) with JP group for acquiring clinker/cement capacities of 3.3mtpa/5.2mtpa at an enterprise value of INR32.3b (translating into an EV/t of USD76).

Outlook

We have raised our EBITDA estimates for FY24/FY25 by 3% each, considering better profitability in 3Q. We have not factored in the JP group asset acquisition into our assumptions. We reiterate Buy with a TP of INR2,120 (from INR2,080 earlier), valuing it at 12.5x Sep’24 EV/EBITDA.