KR Choksey's research report on Dalmia Bharat
Dalmia Bharat Ltd (DBEL), a Tamil Nadu based company, has a 25 MTPA capacity with 48% capacity in South while 52% in East(incl. NER) and has a market share of 8% in South, 14% in east and 22% in northeastern region. We estimate the southern market to grow at 7.2% CAGR and eastern (incl. NER) to grow at 8.5% CAGR over FY16-FY20E.
OutlookWe believe DBEL’s robust volume growth, margin sustainability, reduction in debt and improvement in return ratios will help DBEL fetch premium valuations and will largely benefit from the demand uptick. We value Dalmia Bharat Ltd at an EV/EBITDA of 12X FY-19E arriving at a price target of INR 2460/share translating into a 26% upside from the current price of INR 1951/share.
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