Buy Dalmia Bharat, target price Rs 1070: Motilal Oswal

Motilal Oswal has given a buy rating to Dalmia Bharat with a target price of Rs 1070. The share price moved down by 2.20 per cent from its previous close of Rs 892.60. The stock’s last traded price is Rs 873.

Dalmia Bharat Ltd., incorporated in the year 1949, is a Mid Cap company (having a market cap of Rs 16384.46 Crore) operating in Cement sector.

Financials
For the quarter ended 30-09-2020, the company reported a Consolidated sales of Rs 2410.00 Crore, up 22.09 % from last quarter Sales of Rs 1974.00 Crore and up 7.78 % from last year same quarter Sales of Rs 2236.00 Crore Company reported net profit after tax of Rs 232.00 Crore in latest quarter.

Investment Rationale
DBL should continue to generate strong FCF (in FY22E) and reduce its net debt substantially from ~INR20b currently. The stock trades at an attractive valuation of 6.5x FY22E EV/EBITDA and USD72/t of EV/capacity. Thus, the brokerage rates it a Buy and value the stock at 8x FY22E EV/EVITDA to arrive at a target price of INR1,070.

Promoter/FII Holdings
Promoters held 56.1 per cent stake in the company as of Sept 30, 2020, while FIIs held 14.2 per cent, DIIs 3.7 per cent and public and others 26 per cent.