Dalmia Bharat Q2 Results Review - Inline With Estimates: Nirmal Bang

Nirmal Bang Report

Dalmia Bharat Ltd.'s Ebitda/tonne came in at Rs 950 versus our estimate of Rs 928 (a variance of 2.4%), up 45% YoY. The volume increase was somewhat subdued, coming in at 6.2 million tonne (our estimate 6.3 million tonne), up 7% YoY. The management expects a double-digit increase in volume in FY24. We expect Q2 and Q3 of FY24 to be better in terms of volume and pricing.

The management reported a decline in market share in West Bengal and Bihar. We believe this is temporary and the company will be able to regain market share due to its strong brand equity and sales and marketing strategies.

According to our calculations, interactions with management and market intelligence, the company has sufficient reserves to sustain current and future capacities.

We maintain our 'Buy' rating on Dalmia Bharat and it at 13 times enterprise /Ebitda for September-25E with a revised target price of Rs 2,908.

Key risks include price rollbacks, premiumisation and the potential inability to withstand intense competition in its core markets.

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