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Dalmia Bharat (DALBHARA)’s 2QFY24 EBITDA was in-line with our estimates, as lower-than-estimated opex offsets the miss on volume and realization. EBITDA was at INR5.9b (vs. estimated INR5.8b) and OPM stood at 18.7% (vs. estimated 17.1%). Adj. Profit (after MI) stood at INR1.2b (4.3x YoY), which was 28% above our estimate, led by higher other income. 

DALBHARA announced 0.5mtpa brownfield capacity addition in Bihar with an investment of INR910m, which will be completed in FY25E. In 2QFY24, it increased its clinker/grinding capacity by 0.5mtpa/2.0mtpa in the South. The company’s total clinker/cement capacity rose to 22.2mtpa/43.7mtpa. Its renewable energy share improved to 29% from 27% in 1QFY24. 

The Board has approved an interim dividend of INR4/share, implying a payout of (on 1HFY24 reported PAT) ~30% (and ~11% of 1HFY24 OCF). 

We have a BUY rating on the stock; we will review our assumptions postconference call. 

Volumes up 7% YoY; OPM improves 6pp YoY to 18.7%

DALBHARA’s consol. revenue/EBITDA/adj. PAT stood at INR31.5b/INR5.9b/ INR1.2b (up 6%/up 55%/up 325% YoY and down 7%/up 1%/up 28% vs. our estimates) in 2QFY24. Sales volumes at 6.2mt grew 7% YoY (down 3% vs. our estimate). Realization at INR5,079/t (down 1% YoY/2% QoQ) was 4% below our estimate. However, NPR (realization-freight) was down 1% YoY (+1% QoQ) and was 2% below our estimate.

Variable cost declined 14% YoY (was 4% below our estimate). Freight cost and other expense/t decreased 1%/7% YoY (10% below our estimates each). Overall, opex/t was down 8% YoY (6% below our estimate). 

OPM expanded 6pp YoY to 18.7% and EBITDA/t grew 45% YoY to INR950. Other income jumped 118% YoY while, finance cost/depreciation surged 80%/21% YoY. 

In 1HFY24, the company’s revenue grew 8% YoY, driven by 10% YoY growth in volume and ~2% YoY decline in realization. EBITDA grew 24% YoY to INR12b due to higher volumes and easing cost pressures (opex/t declined 4% YoY). EBITDA/t rose 13% YoY to INR910. Adjusted PAT (after MI) grew 12% YoY to INR2.5b. 

DALBHARA’s CFO stood at INR6.8b in 1HFY24 vs. INR4.1b in 1HFY23. Capex was at INR15.2b vs. INR11.7b in 1HFY23. Gross debt was at INR52.9b vs. INR32.9b in Sep’22. Net debt stood at INR15b vs. INR6.5b in Sep’22. Its net debt to EBITDA stood at 0.59x vs. 0.32x as of Sep’22 (0.52x as of Jun’23).

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