Motilal Oswal Advocates Buying Dalmia Bharat, Sets Price Target at Rs 2230

Dalmia Bharat's Fourth Quarter Results Exceed Expectations

Dalmia Bharat, a leading Indian cement manufacturer, has reported a strong set of fourth quarter results for fiscal year 2026. The company's Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) grew approximately 14% year-over-year (YoY) to INR9.0 billion, exceeding market expectations by 9%.

The growth in EBITDA was driven by lower-than-expected operational expenses, resulting in a significant increase in EBITDA per ton (t) to INR1,025. This represents an 11% YoY growth, exceeding the estimated INR928. The company's Operating Profit Margin (OPM) also surged by 1.9 percentage points (pp) YoY to approximately 21%, outperforming the analyst's estimate by 2.1pp.

In terms of profitability, the company's Adjusted Profit After Tax (PAT) was down approximately 9% YoY at INR3.3 billion, in line with market expectations.

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Stock Valuation and Recommendation

At its current market price (CMP), Dalmia Bharat's stock is trading at an Enterprise Value to EBITDA multiple of 12x and 10x for fiscal years 2027 and 2028, respectively, with an EV/t of USD70 and USD67. The company's stock is valued at 12x fiscal year 2028 EV/EBITDA, resulting in a revised target price (TP) of INR2,230. This is an increase from the earlier TP of INR2,110, primarily due to lower-than-expected cash outflows towards capital expenditures.

The research firm reiterates a BUY recommendation for Dalmia Bharat's stock.

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