MOSL: DALMIA BHARAT (Buy)-A quarter of strong outperformance across all parameters
​Dalmia Bharat: A quarter of strong outperformance across all parameters
(DBEL IN, Mkt Cap USD3.1b, CMP INR2523, TP INR3162, 25% Upside, Buy)
- Superior volume growth v/s peers: 4Q cement volumes grew 17% YoY to 4.55mt (est. of 3.93mt), as volume growth ex-OCL was 28% YoY due to higher volumes from south/north-east and higher sales in MP/Chhattisgarh. Pure cement realizations were flat QoQ (-1% YoY) at INR4,725/t, despite weaker realizations in focus markets, due to higher proportion of premium sales. Hence, revenues rose 15.6% YoY to INR21.85b (est. of INR18.5b).
- EBITDA/t up QoQ despite cost pressures: EBITDA/t for 4QFY17 rose 3% QoQ (-8% YoY) to INR1,212, despite higher fuel prices, as unitary cost/t fell INR112 QoQ on account of: 1) positive operating leverage, 2) lower cost of power production and higher petcoke consumption (78% v/s 74% in 3QFY17) and 3) lower employee cost on disbursement of bonus in previous quarters. Hence, EBITDA increased 8% YoY to INR5.52b for 4QFY17.
- FY17 performance: Volumes at 15.3mt rose 20% YoY, led by growth in southern operations. Realizations declined 3% YoY to INR4,843/t. Hence, revenues increased 15.5% YoY to INR74b. EBITDA/t was flat at INR1,244, and thus, EBITDA increased 19% YoY to INR19b. However, a lower tax rate at 40% (v/s 48% in FY16) resulted in PAT growth of 77% YoY to INR3.37b.
Dalmia Bharat Limited is an India-based holding company. The Company operates as a cement manufacturing company. The Company's segments include Own Manufactured Cement, Refractory, Management Services and Others. The Company's brands include Dalmia DSP, Dalmia, Dalmia Ultra, Dalmia Super Roof, Vajram and Konark. The Company manufactures cement for use in lining of oil wells, airport strips and railway sleepers, among others. The Company owns a 5.5-megawatt capacity solar power plant at Medinipur, West Bengal. The Company also owns thermal power plants, co-generation plants and wind farms. The Company has manufacturing facilities in approximately 11 locations with an installed capacity of 25 million tons per annum. The Company's subsidiaries include Dalmia Power Limited, Adwetha Cement Holdings Limited, Kanika Investment Limited and Dalmia Cement (Bharat) Limited.
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