Dalmia Bharat - Long-Term Growth Story Intact: HDFC Securities

HDFC Securities Institutional Equities

We estimate Dalmia Bharat Ltd. to deliver 8.3% volume compound annual growth rate during FY24-27E and its Ebitda margin to expand to Rs 1,034/million tonne by FY27E, supported by realisation improving FY26 onwards, fuel cost moderation, and various cost reduction efforts.

We estimate revenue and Ebitda to grow at 8/13% CAGRs. On the expansion front, we are building in cumulative capex of Rs 114 billion during FY25-27E. Its net debt to Ebitda should remain under two times.

Dalmia will be announcing the next phase of organic capex over the next few quarters. Even if Dalmia expedites its Capex (ahead of our estimates), the liquidation of IEX shares (current value Rs 26 billion) should moderate the balance sheet impact.

We maintain our Buy rating with an unchanged target price of Rs 2,205/share, valuing it at 12 times its Sep-26E consolidated Ebitda.

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