Hold Dalmia Bharat; target of Rs 1615: Emkay Global Financial

Emkay Global Financial recommended hold rating on Dalmia Bharat with a target price of Rs 1615 in its research report datedd May 10, 2022.

Broker Research

May 12, 2022 / 05:45 PM IST

live

bselive
nselive

Volume

Todays L/H

Emkay Global Financial's report on Dalmia Bharat

Dalmia Bharat’s Q4FY22 EBITDA declined 11% YoY but increased 66% QoQ to Rs6.8bn, significantly above our and consensus estimates, owing to better-thanexpected realization. Accordingly, blended EBITDA/ton fell 14% YoY but rose 43% QoQ to Rs1,035 (Emkay est.- Rs875). Management mentioned that input cost inflation remains a major headwind and that the outlook will be challenging in H1FY23. However, management remains hopeful of a margin recovery in H2FY23. The company has maintained its ambitious target of increasing capacity from 35.9mt to 40mt/48.5mt by Mar’23/Mar’24 and 110-130mt by FY31. However, given the uncertain global environment, management is taking a short pause on announcement of any incremental capacity expansion.

Outlook

We marginally reduce our FY23-24 estimates and cut our Mar’23E TP to Rs1,615 (from Rs1,630). Our DCF-based TP implies a 1-year forward EV/EBITDA of 9.5x. Due to the absence of near-term catalysts, we maintain a Hold rating on the stock.