Emkay Global Financial Recommends ‘HOLD’ For Dalmia Bharat with a Target of Rs 2525

In its research report dated September 28, 2023, Emkay Global Financial has recommended a “hold” rating on Dalmia Bharat, with a target price of Rs 2525.

Dalmia Bharat is expected to benefit from significant price increases in the range of approximately Rs 45-50 per bag in the Eastern region in September 2023. Additionally, the Southern region has announced price hikes of Rs 70-80 per bag, effective from October 2023. These regions collectively contribute more than 80% of the company’s volume. The absorption and sustainability of these price hikes will be closely monitored as a key factor.

Dalmia Bharat has ambitious plans to expand its capacity to 75 million tonnes by FY27 and further to 110-130 million tonnes by FY31, representing a Compound Annual Growth Rate (CAGR) of approximately 15%. Importantly, the company intends to fund around 80% of the upcoming capital expenditure using internal accruals between FY23 and FY26, maintaining a comfortable balance sheet with a net debt-to-EBITDA ratio of under 1.5x.

In light of the higher realizations, Emkay Global Financial has increased its Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) estimates for FY24-26 by 6-9%. To reflect the improved growth prospects and strong balance sheet of the company, they have adjusted the target Enterprise Value-to-EBITDA (EV/EBITDA) multiple upward by one notch to 12x (previously 11x). As a result, the target price for September 2024 has been revised to Rs 2525 per share, following the quarterly roll-over, while maintaining a “HOLD” recommendation.

Investors considering Dalmia Bharat as an investment option may find Emkay Global Financial’s recommendation and target price valuable factors to consider as they make their investment decisions.

Disclaimer: The views and investment tips expressed by investment experts on Sharepriceindia.com are their own and not those of the website or its management. Sharepriceindia.com advises users to check with certified experts before taking any investment decisions.​​
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