Release Date: October 21, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dalmia Bharat Ltd (BOM:542216, Financial) achieved a healthy volume growth of 8.4% year-over-year despite a challenging market environment.
- The company is on track to expand its capacity to 49.5 million tons by the end of FY25, with further plans to reach 75 million tons by FY28.
- Dalmia Bharat Ltd has improved its renewable energy share to 39% and expects to increase it to 45% by the end of FY25.
- The company has maintained a strong financial position with a net debt to EBITDA ratio of 0.25 times.
- An interim dividend of INR4 per share was declared, reflecting the company's commitment to returning value to shareholders.
Negative Points
- Revenues declined by 2% year-over-year due to a sharp decline in cement prices, particularly in the South and Eastern markets.
- The company's EBITDA fell by 27% year-over-year, impacted by weak pricing and increased costs.
- Logistics costs increased by 7.6% year-over-year due to servicing central markets from eastern plants.
- The trade mix decreased to 63%, contributing to a fall in net sales realization.
- The company faced higher other expenses, rising 15.7% year-over-year, due to increased plant shutdowns and material handling costs.
Q & A Highlights
Q: In the second half, how do you expect volume growth for Dalmia Bharat compared to the industry, considering the discontinuation of the JP tolling arrangement?
A: Puneet Dalmia, CEO, stated that Dalmia Bharat aims to grow at 1.5 times the industry growth rate. Despite the JP tolling arrangement discontinuation, they are confident in achieving this target.
Q: What is the current status and future outlook for CapEx, particularly regarding the Northeast expansion?
A: Dharmender Tuteja, CFO, explained that the clinker for the Northeast project is expected by September next year, with grinding capacity coming online in H2 of the current financial year. Approximately INR1,000 crore has been spent on the project so far.
Q: How does Dalmia Bharat plan to handle competitive pricing pressures in the market?
A: Puneet Dalmia, CEO, emphasized focusing on brand investment, distribution deepening, and service improvement. The strategy involves aligning with dealer goals and increasing the premium segment share while maintaining a balance between market share and margins.
Q: What are the expectations for renewable energy usage and cost savings in the coming years?
A: Dharmender Tuteja, CFO, mentioned that the renewable energy share is expected to reach 45% by year-end and 50% next year. Cost savings from renewable energy and other initiatives are projected to be INR150 to INR200 per ton.
Q: How does Dalmia Bharat view the long-term industry outlook and its expansion plans?
A: Puneet Dalmia, CEO, expressed optimism about the industry's long-term prospects, citing India's growth and consolidation trends. The company plans to expand to 75 million tons by FY28, with a focus on strategic market positioning and maintaining a strong balance sheet.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
