Results largely in-line; acquired assets ramp-up key to watch

Research evidence excerpt

Results largely in-line; acquired assets ramp-up key to watch

UpdateM

RiskRisk RewardReward– Dalmia- BharatDalmiaLtd (DALB.NS)Bharat Ltd (DALB.NS)

Limited re-rating triggers despite relatively lower valuation vs. peers

PRICE TARGET Rs1,800.00 UNDERWEIGHT THESIS

Probability-weighted target EV/EBITDA: base case 80%, bull case 10% (upside from faster ▪Low capacity utilization suggests strong

market share gains and margin expansion potential), bear case 10% (downside risks from a volume growth potential over the medium

weak macro environment). term.

Key assumptions - target June-28 EV/EBITDA: bull case: ~10.5x; base case: ~9x; bear case: ~7x. ▪However, as management seeks to balance

Our assumptions are lower than for large peers to reflect a weak margin profile. value and volume, volume growth could lag

that of larger peers. Rs2,193.76

cost improvements over theConsensus Price Target Distribution Rs1,800.00 Rs2,522.00 ▪Significant past few years leave limited scope for MS PT

Source: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates further gains over the next couple of years,

in our view, thereby constraining material

margin expansion.

▪The ramp-up of the acquired Jaypee assets

RISK REWARD CHART will be a key area to watch, both from

volume and profitability perspectives.

INR ▪Despite trading at a discount to larger

Rs2,500.00Rs2,500.00(+38.06%)Rs2,500.00(+38.06%)(+38.06%) peers, we believe the stock lacks near-term

re-rating catalysts and is likely to

2400 underperform.

1800 Rs1,810.80Rs1,810.80Rs1,810.80 Rs1,800.00Rs1,800.00(-0.60%)Rs1,800.00(-0.60%)(-0.60%) Consensus Rating Distribution

67% Overweight

21% Equal-weight

12% Underweight

Rs1,100.00Rs1,100.00(-39.25%)Rs1,100.00(-39.25%)(-39.25%) MS Rating

600 Source: Refinitiv, Morgan Stanley Research