Buy Dalmia Bharat; target of Rs 2400: Motilal Oswal

Motilal Oswal's research report on Dalmia Bharat

DALBHARA’s 1QFY24 EBITDA came in at INR6.1b vs. estimated INR7.2b and EBITDA/t stood at INR875 vs. estimated INR1,001 due to higher opex. Adj. PAT (after MI) came in at INR1.3b vs. estimated INR2.3b. The acquisition deal for the cement assets of JP group is experiencing delays due to pending external approvals. However, the deal, with the exception of JP super Dalla clinker plant (currently under arbitration between UTCEM and JP group), will likely be completed by the end of FY24 (earlier guidance of 1QFY24). The company has initiated a tolling arrangement with certain plants of JP Group located in central India. We cut our EBITDA estimate by 5% for FY24/FY25 (each), while PAT estimate is being reduced by 15%/11% for FY24/25, due to higher depreciation.

Outlook

We have yet not factored JP asset acquisition into our assumptions. We reiterate our BUY rating with a revised TP of INR2,400 (vs. INR2,550 earlier).