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Dalmia Bharat Q1FY22 numbers were below estimates on the volume front but better than expected realizations aided operational profitability. The volumes grew by 33% YoY to 4.89 Mnt but were down ~24% QoQ which is slightly below expectations. Blended realizations were up 2% YoY and 8% QoQ which is ahead of expectations. Cement companies have been taking price hikes, especially in South and East regions, which have helped in absorbing the sharp increase in energy cost. Energy cost jumped from Rs686/tonne in Q1FY21 and Rs875/tonne in Q4FY21 to Rs1057/tonne in Q1FY22. EBITDA/tonne at Rs1432/tonne came in ahead of expectations, up from ~Rs1200/tonne in Q4FY21 and Rs1680/tonne in Q1FY21. Given the higher impact on demand in southern states, we believe that these results are reasonable. We remain positive on the stock considering and maintain our buy rating.

 

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