Geojit recommended accumulate rating on Dalmia Bharat with a target price of Rs 865 in its research report dated August 13, 2020.
Geojit's research report on Dalmia Bharat
Q1FY21 revenue de-grew by 22%YoY mainly due to sharp decline in volumes (-20%ToY) impacted by Covid-19. EBITDA declined by only 7.8%YoY due to sharp improvement in EBITDA margin (31% Vs 26.3%) aided by reduction in costs. EBITDA/Ton improved to record high of Rs.1,678 Vs Rs.1,464. The capacity expansion of ~7.8MT in East is on track with slight delay due to lockdown restrictions. ~4.4MT would be completed in FY21 and balance in FY22. Acquisition of Murli Industries (3MT-Maharashtra) would be completed by Q3FY21 and ramp up is expected in another 12 months. Demand outlook remains uncertain in the short-term but to recover strongly in FY22. We value DBL at 8x FY22E EV/EBITDA.
Outlook
We revise upwards our Target to Rs.865 (earlier Rs.640) considering strong growth in earnings but revised to Accumulate (from Buy) due to recent increase in stock price.
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