Dalmia Bharat Ltd. share price target

We value the company at 10x FY24E EV/EBITDA to arrive at a target price of Rs 1,635/share implying an upside potential of 30% from the CMP and maintain our BUY rating on the stock.

Cement prices declined by 15% over Apr-Dec'21 in East India. However, prices rose 14% over Jan-Mar'22, with further price increase of 7-8% in Apr'22. The region witnessed increasing consolidation after the acquisition of Emami Cement by Nuvoco. The higher consolidation will help improve pricing power in the region in the medium term. Capacity share of the top five players in the region now stands at 72% v/s 63% in FY20....

Forgettable quarter. DALBHARA’s 3QFY22 EBITDA, in line with our estimates, declined sharply (-41% yoy, 26% qoq) due to a triple whammy of weak demand, higher costs and weak prices. However, we see the worst operating performance behind and expect stronger demand, higher prices and abating cost pressures in the coming quarters.

DBL reported revenue de-growth of 4%YoY due to 1.7%YoY decline in volumes impacted by unseasonal rains in East region and 3.5%YoY decline in realisation. The company has taken price hike of ~Rs10-20/bag in January. DBL has commercialized 2.9MT Murli plant in Maharashtra (recent acquisition) in Jan 2022. The ongoing capacity expansion and the ramp up in acquisitions will support future volume growth. The additional capex is for Rs.50bn to reach 48.5MT by FY24. We factor revenue growth of ~14% CAGR over FY22E-24E supported by capacity expansion/acquisitions and improvement in premium/trade mix....

We roll over our estimate to FY24E and value the company at 11x FY24E EV/EBITDA, to arrive at a target price of Rs1945/share. This implies an upside of 9% from the CMP and hence we change our rating from BUY to HOLD.

Targets to operate recently commissioned operations of Murli industries' 3mtpa plant in Maharashtra at 60% in FY23e Dalmia Bharat (DALBHARA) reported Q3FY22 EBITDA below ours/consensus estimates (CE) by 20%/33%. The miss was primarily due to steeper than...