MOSL: DALMIA BHARAT (Buy)-Well-placed to gain market share
DALMIA BHARAT: Well-placed to gain market share
(DALBHARA IN, Mkt Cap USD5.4b, CMP INR2147, TP INR2480, 16% Upside, Buy)
Expansions enhance growth visibility
- Volume declined by 24% QoQ to 4.89mt in 1QFY22 as it lost some market share in East India because of COVID-led lockdowns at plant locations. However, cost control, which was led by a change in product mix, has kept margin intact.
- The announcement of its much awaited capital allocation policy is a big positive. DBEL announced capacity expansion to 48.5mt/110-130mt by FY24/FY31 from 30.8mt, which provides long-term growth visibility.
- We expect market share gains to continue, supported by ~25% capacity expansion over FY23E. We maintain our FY22E/FY23E EPS estimate. Valuations are also reasonable at 11.4x FY23E EV/EBITDA. We reiterate our Buy rating.
Lower volumes led to miss on EBITDA; margin in line
- Revenue/EBITDA/adjusted PAT increased by 31%/14%/3% YoY in 1QFY22 to INR25.9b/INR7b/INR2.7b, -14%/-10%/-6% v/s our estimate. The miss on our estimate was due to a 24% QoQ decline in volume to 4.89mt (est. 5.39mt).
- Cement realization growth at 8% QoQ was strong and largely in line with our estimate. Blended realization growth was weaker at 4% QoQ (INR5,294/t; -2% YoY) due to lower revenue from other businesses.
Dalmia Bharat Limited, formerly Odisha Cement Limited, is an India-based cement manufacturing company. The Company's segments include Cement, Refractory and Power. The Company's products include Portland Slag Cement (PSC), Portland Pozzolana Cement (PPC) and Portland Composite Cement (PCC). The Company's brands include Dalmia DSP, the wellestablished Dalmia Cement, Dalmia Ultra, Dalmia Infra Green Cement and Konark brands.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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