Buy Dalmia Bharat; target of Rs 2180: Choice Institutional Equities

Moneycontrol • 5 days ago

Original source

Key Investment Pillars

  • Volume growth: Expected to grow broadly in line with industry growth of 7-8%, supported by seasonal demand recovery and sustained infrastructure spending.
  • Realization improvement: Sustained realization gains are critical to offset cost inflation, with a recent price hike of ~INR 15/bag providing partial relief.
  • Central India ramp-up: The acquired assets are expected to remain a drag on consolidated profitability in the near term, but offer long-term strategic upside.
  • Cost inflation: Elevated fuel and raw material costs continue to pressure margins, with a further fuel-cost impact of ~INR 75/t expected in Q3FY27.

Thesis Validation Checklist

  • Volume growth: Watch for volume growth to reach 33.1 Mnt by FY28E, driven by a stronger volume expansion.
  • Realization/t: Monitor sales realization to maintain upward momentum, with expected growth of 3.5%/1.5%/1.0% over FY27E-FY29E.
  • EBITDA/t: Track EBITDA per ton to recover from the anticipated impact in FY27E, with expected expansion at a CAGR of 7.9% over FY26-29E.
  • APAT: Follow adjusted PAT to rise at a CAGR of 10.3% over FY26-29E, driven by volume growth and realization improvement.