Dalmia Bharat on Track to Reach 37 Mtpa Capacity Target

The company completed the much-awaited acquisition of Murli Industries under the National Company Law Tribunal. Continuing its upward movement, the stock rose more than 5% intraday to ?771.60 on the NSE on Tuesday. With this, Dalmia Bharat is on track to reach its 37 mtpa capacity target and become the third largest in India by fiscal year 2022, analysts said. Murli Industries has an integrated capacity of 3 million tonnes per annum (mtpa) with plant located at Chandrapur district of Maharashtra. Thus, giving Dalmia Bharat access to three more states of Telangana, Madhya Pradesh and Chhattisgarh. With access to 20 states, it is gradually elevating from the stature of a regional player. Dalmia would be spending ?2500 crore in FY2021-22E towards expansion. Strong operating cash flows would still drive strong free cash flow and reduce net debt from ?2900 crore in FY2020 to ?1700 crore in FY2022E. In absence of new projects, it would become debt-free (net debt level) in FY2023E. Dalmia Bharat has been on an expansion spree, via organic and inorganic routes, from the past few years. With that, Dalmia Bharat continues to consolidate its position in the East and is increasing its presence in the West. In the near-term, given the already crowded region of East, analysts caution of some pressure on the company’s realisations, unless demand improves significantly.