Dalmia Bharat Q2 Review: Outlook Remains Cautious With Growth Plans As Key Positive Trigger

Analysts remain cautious of Dalmia Bharat Ltd.'s expectation of the current financial year and believe that any re-rating depends on its future capacity expansion plans.

CLSA maintains its current rating despite relatively cheaper valuations and added that it remained cautious of its expectation of fiscal 2025 profitability improvement of Rs 900-1000 per tonne.

The brokerage has a 'hold' rating and has cut the target price to Rs 1,835 per share from Rs 1,900 apiece previously. CLSA cut its fiscal 2025-27 Ebitda estimates by 3-4% on weak second-quarter results.

The cement maker reported a 60.2% year-on-year fall in its consolidated net profit for the September quarter. Net profit for the quarter ended September 2024 was at Rs 49 crore, compared to Rs 123 crore in the year ago quarter.

Its consolidated revenue fell 2.1% on year to Rs 3,087 crore as against Rs 3,153 crore in the previous fiscal.

Morgan Stanley sees limited re-rating triggers despite cheap valuations and cut financial year 2025-26 Ebitda estimates by 1%, it said in a note on Oct. 22. The management expects strong competition to limit material cement price expansion and expects cement demand to expand in the second half of current fiscal.

Morgan Stanley remains 'underweight' on the company with a target price of Rs 1,750 per share, a 5% downside from the previous close.

Second-quarter results suggest that the company appears to be focused on market share at the cost of margins, Citi Research said in a note on Oct. 21.

The stock could be rangebound for some time given the concerns around their strategy and delay in growth plans, the brokerage said. Despite this, Citi maintained 'buy'.

Potential cost benefits arising from green energy/efficiencies, and opportunistic price hikes would provide upside momentum, Citi said. It has a target price of 2,150 per share, implying an upside of 17%.

The stocks has fallen 11.7% during the last 12 months and has declined by 19% on a year-to-date basis. The relative strength index was at 43.

Seventeen out of the 33 analysts tracking the company have a 'buy' rating on the stock, nine suggest a 'hold' and seven have a 'sell', according to Bloomberg data. The average of 12-month analyst price targets implies a potential upside of 7.1%.