Sharekhan's research report on Dalmia Bharat
Dalmia announces acquisition of 9.4mtpa cement capacity along with 6.7mtpa clinker and 280MW power capacities of Jaiprakash Associates. Acquisition at an EV of Rs. 5666 crore translates to attractive valuation of $73/tonne. Company to get a head-start in central region with ~10% market share and aligns with its vision of pan-India cement player with capacity of 75mtpa and 110-130mtpa by FY2027 and FY2031. The acquisition is likely to increase its net debt/equity and net debt/EBITDA from 0.04x and 0.32x as on Q2FY2023 to 0.4x and 2.9x on FY2023E earnings but would tread lower by FY2025E led by incremental earnings from acquisition and additional capacity additions.
Outlook
We maintain a Buy on the stock with a revised price target (PT) of Rs. 2,250, increasing our valuation multiple to factor in faster capacity additions and its strong growth potential led by capacity expansions.
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