Dalmia Bharat Q1 Results Review - Profitability Likely To Be Under Pressure: Nirmal Bang

Nirmal Bang Report

Dalmia Bharat Ltd.'s reported Ebitda/tonne was higher than our estimate at Rs 900 versus estimate Rs 698/tonne) due to lower cost of power and fuel/freight/employees by 20.9%/3.3%/3.2% YoY in Q1 FY25.

We believe that sustaining Ebitda/tonne could be a challenge as demand off-take has not improved materially in Q2 FY25 and prices have dipped further by 2-3% from June 2024 exit.

Management has guided for:

• 12% growth in FY25 versus industry growth of 8%,

• Cost savings ~Rs150-200/tonne in the next three years.

Additionally, management will provide concrete roadmap to reach 100 million tonnes per annum+ capacity by FY31-end in 12 months.

We are downgrading Dalmia Bharat Ltd. to an "Accumulate" rating due to

1. maintaining Ebidta/tonne at current levels, given the weak pricing, environment in H1 FY25 and amidst increasing competitive intensity, will be a challenge,

2. Discontinuation of tolling arrangement will jeopardize presence in the Central India market and nullify the potential benefits of sales and marketing expenses,

3. sale of JPA assets to competition,

4. limited cost levers,

5. announcement on organic expansions to come in FY26.

As a result, we have cut our Ebitda estimates by 14%/35% in FY25/ FY26.

We value the Dalmia Bharat at 12 times June 2026 enterprise value/Ebitda (13 times earlier) in line with five-years average multiple (earlier 13 times) to arrive at a revised target of Rs 1,860.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.