Geojit has given Buy recommendation for Dalmia Bharat with a target price of Rs. 2350 in its research report issued on Aug 30, 2021
Geojit’s research report on Dalmia Bharat
Q1FY22 revenue grew by 31%YoY (-21%QoQ) aided by 34%YoY growth in volumes (low base, -20%YoY in Q1FY21). EBITDA grew by 14%YoY while EBITDA margin declined by 410bps YoY (+340bps QoQ) to 27.0%. DBL has been on capacity expansion through organic & inorganic routes. Post completion of the ongoing expansion (8MT in East) and acquisition of 3MT (West), total capacity would be at 38MT (12MT in FY14). Now, DBL has announced additional capex plans to reach 48.5MT by FY24 with Rs.5,000cr capex and outlined a long-term plan to reach 110- 130MT by 2031 while maintaining a strong balance sheet. Despite expansion, debt repayment was strong (Rs.2,224cr in FY21 & Rs.476cr in Q1FY22). Current net Debt/EBITDA is at 0.08x & D/E at 0.1x. Barring near-term uncertainty, demand outlook is positive in the longterm, given GoI’s strong focus on infra & housing. Currently DBL trades at 1Yr Fwd EV/EBITDA of 12.5x, we value at 12x FY23E EV/EBITDA.
We maintain our Buy rating with a revised Target of Rs.2,350 (earlier Rs.1,770) considering strong margins and improving demand outlook.