Buy Dalmia Bharat; target of Rs 2250: Sharekhan

Sharekhan's research report on Dalmia Bharat

In Q3FY2023, the company reported better-than-expected operational performance as operating costs per tonne were lower than expected. Operating profits and net profits were up 57% and 145% y-o-y. It signed a definitive agreement with JP Associates for acquisition of 5.3 MT cement capacity, 3.3 MT clinker capacity and 280 MW thermal power capacity at an attractive valuation of $75 EV/tonne. It would provide inroads in Central India. Management reiterates its commitment of achieving 75 MT cement capacity by FY2027, 110-130 MT by 2031, while it remains on track to achieve 49 MT by March 2024.

Outlook

We maintain a Buy on Dalmia Bharat with an unchanged PT of Rs. 2,250, considering its strong growth potential led by capacity additions.

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