Buy Dalmia Bharat; target of Rs 2985: KR Choksey

KR Choksey's research report on Dalmia Bharat

Total Sales stood at INR 24332 mn which was up by 15.4% y-o-y and 23.7% q-o-q. Volume growth stood at 17% y-o-y reaching 4.55 MT as against 3.88 MT last year. EBIDTA stood at INR 5517 mn which was up by 7.8% y-o-y and 31% q-o-q and EBIDTA/ton stood at INR 1248 as against INR 1361 same quarter last year.

Outlook

On account of strong brand presence, superior margins, reduction in debt and surge in return ratios; we believe the company will fetch premium valuations and would be subject to re-rating depending upon volume growth sustainability and further improvement in efficiency. We value Dalmia Bharat Ltd at an EV/EBITDA of 12x FY19E arriving at a target price of INR 2985 translating into a 19% upside from CMP of INR 2511. We maintain our BUY rating on the stock.