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HDFC Securities Institutional Equities
Domestic brokerage firm HDFC Securities has maintained Buy call on Dalmia Bharat Ltd. with a revised target price of Rs 2,080 per share from earlier Rs 2,200 (12x its FY28E consolidated Ebitda).
Dalmia Bharat estimates industry to deliver 6-7% YoY growth in Q1 FY28 and the company is hopeful at least meeting the industry growth. Cement prices have further recovered QoQ (> Rs 10/bag for Dalmia) which should offset most of the cost increase (fuel, packing and op-lev loss).
The brokerage estimates Dalmia to deliver ~10% YoY volume growth, along with ~Rs 950/MT margin (down ~Rs 70 QoQ).
Dalmia remains upbeat on fully operationalising the acquired assets (5.2 million metric in the central region) by Q2 FY27 and gradually ramping up volume and margins.
Its ongoing expansions in the south/west are broadly on track, leading to 67mn MT capacity by Q3 FY28E.
The brokerage estimates Dalmia to deliver 8.5/12% volume/Ebitda compound annual growth rates over FY26-28E, driven by organic growth, cost efficiencies and rising contributions from the acquired assets.
Net debt to Ebitda ratio will rise to 2.27x in FY27E (from 1x in FY26) and cool off to 2.1x in FY28E).
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