Sharekhan's research report on Dalmia Bharat
In Q1FY2024, the company reported a miss on operational profitability led by higher-than-estimated power & fuel and freight costs. Higher depreciation and interest expenses led PAT to severely miss mark. The management eyes a 15-17% y-o-y volume growth for FY2024 while it would be taking corrective actions in re-gaining market share in East and better cost efficiencies. It would add a 4.9 MTPA capacity in South India to reach 46.6 MTPA by FY2024 end. JP Assets’ acquisition completion gets delayed to FY2024-end.
Outlook
We downgrade Dalmia Bharat to Hold with a revised PT of Rs. 2,100, considering its strong growth potential, factoring downwardly revised estimates and lowering valuation multiple to factor in challenges in its core East region.
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