Buy Dalmia Bharat; target of Rs 3205: KR Choksey

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26 Aug, 2025 12:21

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KR Choksey's research report on Dalmia Bharat

Total sales stood at INR 23055 mn which was up by 14.1% Y-O-Y and down 5.2% Q-O-Q. Sales were in-line with our expectations of INR 23040 mn. Volumes stood at 3.99 MT as against our estimates of 4.1 MT and were up by 6.1% Y-O-Y.  EBIDTA stood at INR 5566 mn which was up by 9.5% Y-O-Y and 0.9% Q-O-Q and EBIDTA margin declined to 27% as against 28.6% same  quarter last year. EBITDA was in-line with our estimates of INR 5530 mn and EBITDA/ton surged to INR 1405 as against INR 1352 in Q1FY17.  PAT stood at INR 1639 mn as against our estimates of INR 1610 mn and was up by 74.4% Y-O-Y and down 11% Q-O-Q while PAT Margin rose to 8% as against 5.3% in Q1FY17.

Outlook

The company pared down debt to the tune of INR 3290 mn while its net debt stood at INR 46020 mn from INR 52410 mn on Q-O-Q basis and we believe that the financial de-leveraging should continue over FY18E-FY19E.  With expected net debt of INR 28925 mn by FY19E, the company trades at an EV/EBITDA of 10.13x and EV/ton of $158. We value Dalmia Bharat Ltd at an EV/EBITDA of 12x FY19E on account of a.) financial de-leveraging, b.) outperforming volume growth, c.) robust market share of 8%/15%/21% in South/East/North-East and d.) superior operating efficiencies; arriving at a target price of INR 3205 translating into a 20.8% upside from CMP of INR 2653. We maintain our BUY rating on the stock.

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