Dalmia Bharat Ltd. – Q3FY24 Result Update

Sector Outlook – Positive
Dalmia Bharat Ltd. (DBL) revenue reached Rs. 3,600 crores, showing a 14.3% quarterly and 7.3% yearly increase, slightly surpassing expectations. Cement sales rose by 8% to 6.8 million tonnes, driving EBITDA up by 20.4% to Rs. 775 crores, thanks to higher prices and demand. 

Profit after tax soared by over 114% quarterly to Rs. 266 crores. EBITDA per tonne hit a nine-quarter high at Rs. 1,138, attributed to an 11% yearly growth. 

A significant 23% yearly drop in fuel costs to Rs. 1,102/tonne and a slight decrease in freight costs to Rs. 1,091/tonne contributed to this performance, with lead distance at 283 km.

Key Concall Highlights

• The cement industry is expected to grow by 8-9%.
• The company aims for 15% volume growth to reach 110-130 million tons by 2031.
• Last year saw 16% volume growth and 20% revenue growth, with similar targets this year. Expansion into new regions will contribute to volume growth.
• Plans to finalise the acquisition of Jaypee Cement this quarter.
• Expects January prices to drop but volumes to exceed the December quarter.
• Solar panel cost reductions have lowered renewable energy expenses.
• Completed a cement project adding 0.9 MT capacity in Belgaum this quarter. Plans to add 2 MT by FY24 and another 3 MT by H2 FY25.
• Estimated capex is Rs 2000 crores for FY24 and Rs 3000 crores for FY25.
• Reduced debt this quarter, with gross debt now at Rs 4928 crores.

Valuation and Outlook

Dalmia Bharat Ltd., known for its low production costs, saw its earnings (EBITDA) rise by 20.3% from last year and 31.5% from the last quarter to Rs. 775 crores, thanks to stable cement prices and reduced commodity costs. 

Revenue went up by 7.3% yearly and 14.3% quarterly, boosted by post-festival demand and government infrastructure spending. With a focus on using its resources more efficiently and keeping costs down, the company expects steady performance ahead. 

It aims to keep earnings per tonne between Rs. 1,100-1,200 for FY25, assuming market conditions are favourable. The company’s ongoing efforts to expand capacity and recent acquisitions are set to meet the growing cement demand, projected to increase by 8-9%.