Dalmia Bharat stock outlook: Strong growth story, upbeat demand; HDFC Sec keeps ‘buy’, check target price

Bharat forge stock to buy


Dalmia Bharat stock fell 0.57% to Rs 2,173 today. Analysts at HDFC Institutional Equities Research maintain a ‘buy’ rating on the stock with a target price of Rs 2,350 per share (13x its FY25E consolidated EBITDA). “We remain positive about Dalmia’s growth prospects. Strong demand tailwinds and ongoing expansions (organic and inorganic) should support its 18% volume CAGR during FY23-25E, in our view,” said the report.

Upbeat on demand; costs to fall

Dalmia management is hopeful of witnessing an upsurge in demand and a continued reduction in operating costs as the fuel price has continued to fall in the last two months, according to the note. “The management expects cement demand in India to grow at 9% YoY in FY24 (even on the high base of FY23), led by a solid offtake from the infrastructure segment. As the fuel price cool-off has accelerated in the past two months, management expects operating costs to continue to trend down throughout FY24. It expects the industry to pass on some of the cost tailwinds, leading to FY24 NSR correcting by 1-2% YoY,” said the HDFC report.

Moreover, with an ambition to ramp up the blended cement production to 100% by 2026, Dalmia stood at 84%, impacted by sub 70% blended cement in the south (vs 100% in the east), in FY 23. “The ongoing WHRS/solar power additions are expected to boost green power consumption share to 30% in FY25E. It already achieved an industry-leading 17% TSR in FY23 and is targeting 100% by 2035,” said the report. “Falling energy costs and rising usage of low-cost green energy should further drive EBITDA margin recovery to INR 1,050/MT in FY25E,” it added.

The growth trajectory to continue to rise

Dalmia’s revenue has significantly benefited from the monetization of its non-core assets, namely Hippo retail and refractory businesses. Additionally, the company intends to sell off its IEX investments, which are currently valued at Rs 17 billion. “These will both increase focus on the core business of cement and also keep leverage under check as Dalmia has ambitious plans to double capacity to 75mn MT during FY23-27E and reach 110-130mn MT by FY31E,” it said.

Dalmia Bharat Stock Performance

Dalmia Bharat market cap stands at Rs 40,806 crore. The prices for the 52-week high were reported at Rs 2288.80, whereas the 52-week low fell to Rs 1,298. Dalmia Bharat share price has jumped 1.46 % in the last one month and has surged a whopping 66.72% in the last one year.


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