Buy Dalmia Bharat Ltd for the Target Rs. 2,620 by Choice Institutional Equities
* Outlook: We maintain our BUY on Dalmia Bharat (DALBHARA) with a revised TP of INR 2,620 (vs. INR 2,500), post number fine-tuning and 3-month rollover. Our positive view is underpinned by: (1) ~15 MTPA capacity addition by FY28E in new regions at efficient capex, (2) Cost optimization program targeting INR 150–200/t savings by FY28E, (3) Sector tailwinds from demand recovery and strong pricing, and (4) RoCE expansion of 491 bps over FY25– 28E. We value DALBHARA on an EV/CE framework, ensuring a rational multiple aligned with fundamentals.
* We expect DALBHARA’s EBITDA to grow at a 27.1% CAGR over FY25– 28E, led by volume growth of 9%/10%/10% and realization growth of 4.5%/2%/2% in FY26E/27E/28E. We remain constructive on its disciplined capital allocation, robust balance sheet (Net Debt/EBITDA <2x), and strong push on premium sales, which provides meaningful upside optionality.
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