Buy Dalmia Bharat target of Rs 2140: Prabhudas Lilladher

Prabhudas Lilladher's research report on Dalmia Bharat

Dalmia Bharat (DALBHARA) reported Q4FY21 EBITDA above our/consensus estimates (CE) by 8%/6%. Stronger than expected realisations drove the beat, partially offset by higher costs. As against the consensus of softer profitability in East region due to sharp surge in new capacities, region delivered sharp turn-around in margins on back of steep increase in prices. We expect DALBHARA’s East operations to maintain 20% higher margins over region’s average at Rs1,100/t on back of its advantageous plant locations having lead distance lower by 250kms over its peers.

Outlook

Underpinned by 1) highly efficient operations- ranks among Top-5 players on margins in the sector, 2) sizeable operations- 4th largest player with 30.8mnt capacity (growing to 39mnt by FY23) and 3) attractive valuations- EV/EBITDA:10.1x/8.2x FY22e/FY23e at near ~40% discount to its peers, we maintain BUY rating with TP of Rs2,140, EV/EBITDA of 12x FY23e.

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