Dalmia Bharat: Recommendation to Buy with Target Price of Rs 2405 from Choice Institutional Equities
Dalmia Bharat Maintains BUY Rating Despite Earnings Downgrades
Choice Institutional Equities has reaffirmed its BUY rating on Dalmia Bharat, while revising its target price downwards to INR 2,405/share. This decision is based on earnings downgrades of approximately 3.9% for FY27E and 1.9% for FY28E due to increasing input cost pressures driven by geopolitical uncertainty.
The company's management has guided for a cost increase of INR 125-150 per ton in Q1FY27 compared to Q4FY26. This rise is primarily attributed to packaging costs (INR 80-90 per ton), with the remaining impact stemming from logistics and power & fuel expenses. Despite the company's efforts to implement price hikes, with further increases expected, Choice Institutional Equities estimates a net cost escalation of approximately INR 80 per ton, which is likely to exert mild pressure on EBITDA per ton in FY27E.
Revised Target Price and Valuation Framework
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The revised target price of INR 2,405/share is based on an Enterprise Value to Cash Earnings (EV/CE) valuation framework. In this framework, a multiple of 1.6x is assigned for FY28E.
| Recommendation | FY27E Earnings Downgrade | FY28E Earnings Downgrade |
|---|---|---|
| Dalmia Bharat | 3.9% | 1.9% |
| Source: Choice Institutional Equities |
This revised target price reflects the current market conditions and the company's anticipated performance in the coming years.
Investor Takeaway
Investors should consider buying Dalmia Bharat with a target price of Rs 2405.
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