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ICICI Securities Report
Dalmia Bharat Ltd.'s Q2 FY22 adjusted Ebitda at Rs 5.6 billion (down 19% YoY) was below our as well as consensus estimates.
While total cost/tonne remained flat QoQ, realisation declined 6.6% QoQ, resulting in 24% QoQ fall in adjusted Ebitda/tonne to Rs 1,108/tonne (our estimate; Rs 1,184/tonne).
We have reclassified Rs 560 million prior period incentive from the Government of Bihar from revenue to extraordinary item for better comparison.
While investor concern around sharp cost increases seems valid, industry has demonstrated strong pricing resilience in the past.
Our recent channel checks suggest companies have increased prices by Rs 15-20/bag across regions.
Factoring in input price escalations, we cut our FY22E-FY24E Ebitda of Dalmia Bharat by 6-8%.
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