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Lower volume leads to EBITDA miss

* Dalmia Bharat’s (DALBHARA) 4QFY25 EBITDA was below our estimate (~6% miss) due to lower-than-estimated volume (~3% miss). EBITDA grew ~21% YoY to INR7.9b and EBITDA/t increased ~24% YoY to INR922 (est. INR946). OPM increased 4.2pp YoY to ~19% (est. ~20%). PAT (adj. for prior-period tax reversals) was at INR3.6b (+41% YoY; +28% vs. estimates), backed by higher other income (up 2.5x QoQ) and lower depreciation expenses (-14% QoQ).

* The company commissioned 2.4mtpa cement capacity in Lanka (Assam) and 0.5mtpa in Rohtas (Bihar), taking its total cement capacity to 49.5mtpa. The company announced the next leg of expansions in Belgaum, Karnataka (IU), and Pune, Maharashtra (GU). The grinding capacity will rise to 55.5mtpa by FY27E vs. 49.5mtpa currently. Further, its clinker capacity will increase to 27.1mtpa/30.7mtpa by FY26E/FY27E from 23.5mtpa currently.

* Additionally, the company commissioned a 2.2MW captive solar plant in Assam and 13MW under a group captive model, taking its total operational renewable energy (RE) capacity to 267MW. RE consumption stood at ~36% (including third-party purchases) vs. ~33% in 3QFY25. RE power capacity will be increased to 594MW in FY26E from 267MW in FY25.

EBITDA/t stood at INR922 (vs. estimate of INR946)

* Consolidated revenue/EBITDA/adj. PAT stood at INR40.9b/INR7.9b/INR3.6b (-5%/+21%/+41% YoY and -4%/-6%/+28% vs. our estimate) in 4QFY25. Sales volumes declined 2% YoY to 8.6mt (3% below our estimate). However, sales volume ex-JPA was up ~5% YoY. Realization declined 3% YoY to INR4,757/t (flat QoQ; in line).

* Variable costs/t declined ~11% YoY (4% above estimate). Other expenses/Freight cost per ton declined ~12%/2% YoY (-13%/+4% vs. our estimate). Employee costs increased ~6% YoY to INR2.2b. Opex/t was down 8% YoY (in line with our estimate). OPM surged 4.2pp YoY to ~19%, and EBITDA/t increased 24% YoY to INR922.

* In FY25, consolidated revenue/EBITDA/PAT declined 5%/9%/9% YoY. Sales volume increased ~2% YoY to 29.4mt, while realization declined ~7% YoY. OPM dipped 80bp to ~17% and EBITDA/t declined 11% YoY to INR820. CFO declined ~20% to INR21.2b. Capex stood at INR26.3b vs. INR27.2b in FY24. It posted cash outflow of INR5.1b vs. cash outflow of INR880m in FY24.

* The company’s net debt (including investment in IEX valued at INR23.4b vs. INR24.2b as of Dec’24) declined to INR7.2b from INR12.4b as of Dec’24. The net debt-to-EBITDA ratio stood at 0.30x vs. 0.55x as of Dec’24. Excl. MTM value of IEX investments, the ratio stood at 1.27x in Mar’25.

Valuation and View

* DALBHARA's profitability was largely in line with estimates; however, lowerthan-estimated volume led to EBITDA miss. Recently, it announced capacity expansion in south and Maharashtra regions. In the earnings concall, we will seek management guidance on the demand environment, pricing trends in its core markets, and its expansion strategy. We have a BUY rating on the stock; however, we would review our assumptions after the concall on 24th Apr’25 at 10:30 IST (Link to the call)

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