The shares of the 4th largest cement company fell up to 5 percent after the company’s net profit fell by 60 percent YoY and 66 percent QoQ, respectively in Q2FY25.
With a market capitalization of Rs 34,742.26 crore, the shares of Dalmia Bharat Ltd (NS:DALB) were trading at Rs 1,853.85 per share, decreasing around 1 percent as compared to the previous closing price of Rs 1,850.35 apiece.
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Reason for rise:-
The shares of the company have a significant fall after revenue fell by 2 percent on a yearly basis from Rs 3,153 crore in Q2FY24 to Rs 3,087 crore in Q2FY25, however in Quarter on Quarter basis, revenue shrunk by 14 percent from Rs 3,621 crore in Q1FY25 to Rs 3,087 crore Q2Y25.
Moreover, net profit has fallen drastically by 60 percent on a yearly basis from Rs 123 crore in Q2FY24 to Rs 49 crore in Q2FY25, meanwhile on a quarter-on-quarter basis net profit shrunk by 66 percent from Rs 145 crore in Q1FY25 to Rs 49 crore in Q2FY25.
Growth Trajectory:-
The company aims to drive growth through strong execution and a solid balance sheet, targeting cost savings of ₹150-₹200 per ton over the next three years. Key focus areas include renewable power, captive coal mines, and logistics, with flexibility due to fluctuating fuel costs and spreads.
Volume growth:-
The company anticipates nearly 8% industry volume growth while targeting 12% growth, including tolling volumes. Confident in achieving this goal, discussions are ongoing with the Independent Regulatory Panel (IRP) to secure the necessary tolling volumes to support their ambitious growth targets.
Cost Reduction:-
The company aims for a ₹150-₹200 per ton cost reduction over the next three years, focusing on savings from renewable energy, captive coal mines, and efficiency enhancements. Current international pet coke prices serve as the baseline for these cost-reduction calculations, guiding their strategy.
Market Dynamics:-
The company recognizes short-term price pressure in the Southern market due to consolidation. However, they anticipate stabilization or price increases in the long term as consolidation progresses. Dealers are showing acceptance for products, indicating a positive market sentiment despite current fluctuations.
Capex plan:-
The company anticipates a capital expenditure of ₹3,500 to ₹4,000 crores for the year, planning to divest its IEX stake as a short-term investment to finance expansions. With a current blended market share of 7.5% to 8%, the goal is to reach nearly 10% by FY’31.
Company Portfolio:-
Dalmia Bharat Limited is an Indian cement-producing firm. The Company primarily manufactures and sells cement and associated materials. The Company’s segments are Cement and Others.
Written by:- Abhishek Singh
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