Dalmia Bharat Q4 Results Review — Cost Wins Offset Volume Drags; Systematix Upgrades The Stock To 'Buy'

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Systematix Report

Dalmia Bharat Ltd. reported its numbers where revenue was below expectations due to soft pricing and subdued volume growth while Ebitda/PAT exceeded estimates owing to strong operational efficiency.

Consolidated revenue de-grew 5.0% YoY (+28.6% QoQ) to Rs 40.9 billion versus our estimate of Rs 43.9 billion as realizations remained largely muted sequentially and lower than expected volumes.

Volume was down 2.3% YoY (+28.4% QoQ) to 8.6 mt below our estimate of 9.2 mtpa. Blended Realization disappointed as they de-grew 2.8% YoY (+0.2% QoQ) and stood at Rs 4,757/tonne.

Ebitda was up 21.3% YoY (+55.2% QoQ) to Rs 7.9 billion vs our expectations of Rs 7.0 billion. Ebitda/tn rose to Rs 922 from Rs 743/tn in Q4 FY24.

Opex/tn fell by Rs 316/tn YoY led by decline in raw material (-19.9% YoY) and other costs (-11.7% YoY).

Lower than expected effective tax further boosted reported PAT to Rs 4.4 billion versus Rs 3.2 billion in Q4 FY24. Capacity utilization for the quarter stood at 69% vs 81% in Q4 FY24. Premium product mix improved from 21% to 24%, with improved trade mix. We forecast a volume/ revenue/Ebitda/PAT CAGR of 7.5%/10%/25%/50% over FY25- FY27E.

We upgrade stock to Buy (previous Hold) with a target price to Rs 2,257 based on 11.5x FY27E EV/Ebitda as the growth prospects look optimistic backed by healthy demand, capacity expansion and cost excellence.

Capacity expansion progress as well as industry price recovery remains a key monitorable.

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