Dalmia Bharat Q2 Results Review - Higher Opex Reduction Leads To Better-Than-Expected Margins: Motilal Oswal

Motilal Oswal Report

Dalmia Bharat Ltd.’s Q2 FY24 Ebitda came in at Rs 5.9 billion versus estimated Rs 5.8 billion and Ebitda/tonne stood at Rs 950 versus estimated Rs 905. Adjusted profit after tax (after MI) came in at Rs 1.2 billion (4.3 times YoY) versus estimated Rs 927 million, driven by higher ‘other income’.

The company lost some market share in North Bihar and West Bengal due to certain pricing decisions that did not yield the intended results. It has implemented some corrective measures and the company anticipates positive outcomes starting from Q4. Its focus is on optimising utilisation and outpacing industry growth.

We raise our Ebitda estimate by 2% for FY24/FY25 (each) and profit after tax estimate by 3% for FY24/FY25 (each), given the higher cost savings.

We have not yet factored in JP asset acquisition into our assumptions.

We reiterate our 'Buy' rating with a revised target price of Rs 2,800 (versus Rs 2,760 earlier).

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