Dalmia Bharat Q1 Review - Volume Growth Healthy; Soft Pricing To Continue In The Near Term: Motilal Oswal

Motilal Oswal Report

Dalmia Bharat Ltd.’s Q1 FY25 Ebitda grew ~8% YoY to Rs 6.7 billion (24% beat). Ebitda/tonne was up 2% YoY to Rs 904 (versus estimate Rs 712). Adjusted profit (adjusted for a one-time provision of Rs 840 million post-tax) jumped ~83% YoY to Rs 2.3 billion (versus estimate Rs 1.0 billion).

The intermittent capacity target of 75 million tonnes per annum is deferred to FY28 versus the previous timeline of FY27. Further, management will share a detailed expansion plan, including the location and timeline of commissioning, after 12 months. The company has brownfield expansion opportunities and limestone mines in Central and North. It identified areas of sustainable cost reduction of Rs 150200/tonne in the next three years through a reduction in variable costs.

We believe the extension of the medium-term capacity target, continuing weak pricing in the core markets, and uncertainty over the continuity of the tolling arrangement with JPA will be near-term challenges for stock performance.

We maintain our FY25-27 earnings estimates. We value Dalmia Bharat at 12 times June-26E enterprise value/Ebitda to arrive at our target price of Rs 2,300. Reiterate Buy.

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