Buy Dalmia Bharat; target of Rs 3141: Motilal Oswal

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

live

• bselive
• nselive

Volume

Todays L/H

More

×

Motilal Oswal's research report on Dalmia Bharat

The Indian cement industry witnessed a supply CAGR of 11% over FY07-17; however, the pace of capacity addition slowed down from 46mtpa in FY08-10 to 21mtpa in FY14-17. Demand during the same period increased at only 6% CAGR leading to utilization levels reducing from 90% in FY07 to 62% in FY18. Capacity is expected to grow at 4% CAGR over FY18-23, driven by difficulty in limestone access and credit availability. Rise in cost of land and quick insolvency processes should further restrict aggressive capacity addition. As a result, the industry should witness consolidation and the top-5 players who constitute 47% of the capacity share should account for 55% in FY21.

Outlook

We value the stock at 11.5x FY20E EV/EVITDA ( 2-year average of 1-year forward EV/EBITDA as DBEL's multiple was re-rated in the last two years, post deleveraging of balance sheet) and arrive at a target price of INR3,141/share (implied EV/ton of USD163).

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Read More