Sharekhan's research report on Dalmia Bharat
The company announced divestment of its refractory business to promoter group entity for Rs. 800 crore, valuing at ~24x EV/EBITDA. Post-tax profit of Rs. 348 crore from the transaction to be accounted in FY2023. Proceeds from the sale of the refractory business, redemption of NCDs in Hippo Stores, and expected divestment of the balance 15% stake in IEX to aid in financing its growth plans. The company remains committed to achieving 75 MT and 110-130 MT cement capacities by FY2027 and 2031, while it would reach 54 MT cement capacity by FY2024, exceeding 49 MT target. Net Debt to EBITDA to remain below 2x.
Outlook
We maintain our Buy rating on Dalmia Bharat with an unchanged PT of Rs.2,250, considering its strong growth potential led by capacity additions.
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