MOSL: DALMIA BHARAT (Buy)-In-line quarter-Net debt reduction program on track
​Dalmia Bharat: In-line quarter; Net debt reduction program on track
(DBEL IN, Mkt Cap USD3.9b, CMP INR2973, TP INR3517, 18% Upside, Buy)
- Volume growth led by OCL: Cement volumes grew 6% YoY to 3.64mt (est. of 3.69mt) in 2QFY18, led by volume growth in OCL operations. Pure cement realization was INR4,945/t (-INR151 QoQ /+INR243 YoY), led by lower pricing in south and east. Revenue thus stood at INR18.3b (-10% QoQ/+7% YoY).
- Sequential decline in EBITDA due to cost push: EBITDA/t declined 1% YoY (-13% QoQ) to INR1,213 in 2QFY18, as higher realization was offset by cost push. Unitary cost/t increased 1% YoY due to higher power & fuel and raw material cost (higher prices of slag), partially offset by lower other expenses (-22% YoY). Hence, EBITDA rose 5% YoY to INR4.41b. Interest cost declined 14% YoY, as debt was reduced by INR5.1b in 1HFY18. PAT increased by 3.4x to INR1.06b, as the tax rate was lower at 31% in 2QFY18 v/s 59% in 2QFY17.
- Concall highlights: (a) Petcoke consumption rate was at USD85/t for 2QFY18 v/s spot prices of USD105/t. (b) Kiln productivity increased by 9% in 2QFY18. (c) Petcoke consumption at 76% for 2QFY18. (d) Lead distance reduced by 20km to 270km, and is expected to remain at these levels.
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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