Dalmia Bharat Reports Strong Q2 Results, Shares Rise 3.5%

Dalmia Bharat Reports Strong Q2 Results, Shares Rise 3.5%
Dalmia Bharat Reports Strong Q2 Results, Shares Rise 3.5%
Dalmia Bharat Reports Strong Q2 Results, Shares Rise 3.5%
Dalmia Bharat Reports Strong Q2 Results, Shares Rise 3.5%

Dalmia Bharat Reports Strong Q2 Results, Shares Rise 3.5%

Dalmia Bharat Reports Strong Q2 Results, Shares Rise 3.5%

Dalmia Bharat Reports Strong Q2 Results, Shares Rise 3.5%

Dalmia Bharat’s share price increased by up to 3.5% in morning trading on Monday following the company’s robust performance in the September quarter.

Key highlights from Dalmia Bharat’s Q2FY24 results:

  • The company reported a healthy volume growth of 6.6% year-on-year, reaching 6.3 million tonnes (mt), thanks to strong cement demand.
  • Dalmia Bharat’s per tonne profitability improved to ₹950 per tonne compared to ₹875 in the previous quarter and ₹653 in the year-ago quarter.
  • The decline in costs, including freight and other expenses, contributed to improved profitability.

Analysts at Jefferies India Pvt Ltd noted that the cement sector’s earnings season began on a positive note with Dalmia Bharat beating Ebitda expectations. The company reported 55% year-on-year growth in Ebitda for Q2, surpassing Jefferies’ expectations by 7%, primarily due to lower costs.

Key cost per tonne highlights:

  • Dalmia Bharat’s cost per tonne declined by 8% year-on-year, 4% lower than analysts’ expectations, primarily driven by lower freight and other expenses.

Despite lower growth in East India, Dalmia Bharat recorded strong volume growth of 6.6% year-on-year. Cement prices in India continued to rise, averaging ₹357 per 50 kg bag in the quarter, up from ₹355 in the previous quarter and ₹349 in the year-ago quarter. The price hikes during the seasonally weak quarter, affected by the monsoon season, surprised market observers.

The company’s revenue increased by 6.0% year-on-year to ₹3,149 crore, and reported net profit for the quarter reached ₹123 crore, marking a 162% year-on-year growth.

Dalmia Bharat is in the process of expanding its capacities. In the last 3.5 years, it has added 17.2 mt of cement capacity, representing a 65% growth over the FY20 capacity. The company aims to reach 110-130 mt by 2031.

Analysts at Antique Stock Broking believe that recent sharp price hikes in Dalmia Bharat’s key markets in the East and South, if sustained, are likely to improve the company’s realizations and Ebitda/ton by more than ₹300 per tonne in the second half of FY24.

Dalmia Bharat’s strong Q2 performance has led to consensus earnings upgrades, with analysts maintaining their FY24-25E Ebitda while raising the target price to ₹2,500 per share from ₹2,400 per share earlier.

The stock is trading at 14.6 times and 11.6 times FY24 and FY25 estimated EV/EBITDA, with an Enterprise value per tonne of $111 and $109, according to analysts at Motilal Oswal Financial Services. Over the last 5 and 10 years, it has traded at an average Enterprise value to Ebitda ratio of 10.5 times and 9.5 times, respectively.

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