Company Update : Dalmia Bharat Ltd By Motilal Oswal Financial Services Ltd
Performance below estimate; EBITDA/t at INR767
* Dalmia Bharat (DALBHARA) reported a weak performance in 3QFY25 with EBITDA declining ~34% YoY to INR5.1b (~11% miss due to lower-thanestimated volume and higher-than-estimated variable cost/t). OPM contracted 5.6pp YoY to ~16% (est. ~17%). EBITDA/t stood at INR767 (est. INR800). Adj. PAT declined 78% YoY (60% below estimates due to lower other income).
* DALBHARA increased clinker capacity by 0.9mtpa to 23.5mtpa following debottlenecking initiatives at Rajgangpur (0.6mtpa) and Kadapa (0.3mtpa). Additionally, the company commissioned a 4MW captive solar plant in West Bengal and 46MW under a group captive model, taking its total operational RE capacity to 252MW. The RE consumption stood at ~33% (including thirdparty purchases) vs. ~39% in 2QFY25
Volumes dip ~2% YoY, realization down ~10% YoY
* Consolidated revenue/EBITDA/PAT stood at INR31.8b/INR5.1b/INR590m (-12%/-34%/-78% YoY and -6%/-11%/-60% vs. our estimates) in 3QFY25. Sales volumes declined 2% YoY to 6.7mt (7% below our estimate). However, sales volume ex-JPA was up ~4% YoY. Realization stood at INR4,773/t (down 10% YoY; up 4% QoQ), which was 1% above estimate.
* Variable costs/t declined ~11% YoY (5% above estimate). Other expenses/ Freight expenses per tonne increased 4%/3% YoY (in line). Employee costs increased 1% YoY to INR2.2b. Opex/t was down 4% YoY (2% above our estimate). OPM contracted 5.5pp YoY to ~16%, and EBITDA/t declined 33% YoY to INR767. Depreciation/interest costs dipped 2%/6% YoY. Other income decreased 38% YoY.
* Its 9MFY25 consolidated revenue/EBITDA/PAT declined 5%/19%/34% YoY. Volume increased by 4% YoY to 20.8mt while realization declined ~8% YoY. OPM dipped 2.8pp to ~16% and EBITDA/t declined 22% YoY to INR777. The company’s net debt (including investment in IEX valued at INR24.2b vs. INR27.2b as of Sep’24) increased to INR12.4b from INR6.4b as of Sep’24. Net debt-to-EBITDA ratio stood at 0.55x vs. 0.25x as of Sep’24.
Valuation and View
* DALBHARA's profitability was below our estimate, due to lower-thanexpected volume and higher variable costs/t. However, realization/t was marginally better than estimate. The company is yet to announce its next phase of expansions. Over the concall, we will seek management guidance on the demand environment and pricing trends. We have a BUY rating on the stock; however, we would like to review our assumptions after the concall on 22nd Jan’25 at 10:00 IST (Link to the call).
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