Bluechip Cement Stock Planning 32% Capacity Expansion, Buy With Rs. 1,850 Target Price: Axis Securities

Axis Securities, a leading brokerage firm suggests buying the stock of Dalmia Bharat Ltd. for good short-term returns. Dalmia Bharat Ltd. is a top cement manufacturer in India. Its capacity is geographically diversified (East: 47%, South: 33%, North-East: 12% and West 8%), which keeps it relatively insulated from regional demand-supply fluctuations.

Stock To Buy: Target Price

The Current Market Price (CMP) of Dalmia Bharat Ltd. is around Rs. 1,598. Axis Securities has estimated a Target Price for the stock at Rs. 1,850. This stock has the potential to give a 16% return, in the upcoming 1 year. It is a large-cap stock with a market capitalization of around Rs. 28,176 crore.

Stock Outlook
Current Market Price (CMP)	Rs. 1,598
Target Price	Rs. 1,850
Potential 1 year return	16.00%
52 week high share price	Rs. 2,199
52 week low share price	Rs. 1,212.50

Capacity expansion to boom the company's growth

Dalmia Bharat is expanding its cement grinding capacity by 32% to 49 million tonnes per annum (mtpa) from the current 37 mtpa which is expected to be operational in phases over FY23E & FY24E. These capacities would be created in the company's home markets of East and South India. This along with a ramp-up of recently commercialized new capacities would provide a notable growth impetus to the company moving forward. We expect Dalmia Bharat to deliver revenue CAGR of 16% over FY22-FY24E, driven by a volume CAGR of 12% over the same period.

Stock Upside - outlook

Giving a buy rating, Axis Securities said, "The company reported encouraging Q1FY23 results with Revenue/Volume growth of 28%/27% YoY respectively. It reported healthy EBITDA Margins of 17.7% and EBITDA/Tonne of Rs. 945 despite severe cost headwinds. We believe the company is well-positioned to grow its revenue and profitability moving forward, supported by a revival of cement demand in its key markets in both trade and non-trade segments, Cost optimization measures, and increasing premium cement sales aided by capacity expansions."

Company Portfolio

Dalmia Bharat Limited was established in 1939, has emerged as one of the fastest-growing players in the Indian cement sector. It commands a 5% share of Indian cement capacity in the areas where it operates. Dalmia Bharat has a total cement production capacity of 37 mtpa, clinker capacity of 20.9 mtpa, and a power generation capacity of 315 MW including WHRS & Solar power. The company's operations span across 14 locations in India through its 10 integrated plants and 4 grinding units along with a robust distribution network of 35,000 channel partners spread across the country.

Disclaimer

The above stock was picked from the brokerage report of Axis Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.