MOSL: DALMIA BHARAT (Buy)-Capacity expansion to drive market share gains
DALMIA BHARAT: Capacity expansion to drive market share gains
(DALBHARA IN, Mkt Cap USD2.4b, CMP INR890, TP INR1070, 20% Upside, Buy)
Healthy cash flow to drive deleveraging
- Dalmia Bharat’s (DBL) 3QFY20 results highlight its market share gains with volume growth of 14% YoY, especially at a time when market growth was sluggish. We expect this trend to continue supported by 30% capacity expansion in the next 12 months.
- We maintain our FY20/21E est. and Buy The commissioning of new capacities and ongoing deleveraging should drive re-rating.
EBITDA in line; volumes surprise positively
- EBITDA was up 20% YoY to INR4.6b (in-line), with margin at 18.9% (+1.34pp YoY; -2.3pp QoQ).
- Cement volumes were strong at 5.1mt (+14% YoY, 9% above est.), driving 12% YoY revenue growth to INR24b.
- However, realization was weak declining 5% QoQ (and 2% YoY) to INR4,741/t (v/s est. INR4,822/t), led by weaker pricing in the South/East.
- EBITDA/t declined 16% QoQ to INR896/t (+5% YoY; 6% below our est.) due to lower realization.
- PAT was down 14% YoY to INR240m (v/s est. INR249m loss); other income was 70% above est. at INR680m (+39% QoQ).
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.
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