Nomura has maintained a ‘buy’ rating on Dalmia Bharat Ltd and has increased its target price to Rs 2,900 per share, indicating a 48 percent increase. The National Asset Reconstruction Company Ltd (NARCL) recently submitted a binding bid to acquire Jaiprakash Associates, a move seen favorably by the brokerage. Nomura anticipates the deal to be finalized in the second half of FY25.
Dalmia Bharat’s acquisition of Jaiprakash Associates Limited’s assets has faced delays, primarily due to a lack of approval from lenders, involving more than 30 banks. However, Nomura views the NARCL bid positively and expects the deal to proceed in the latter half of FY25.
In early April, NARCL proposed to acquire Jaiprakash Associates Ltd’s debt, which stood at Rs 26,000 crore in FY23, with Rs 19,000 crore in principal outstanding. NARCL bid Rs 10,000 crore against the principal outstanding. The bid is likely to be accepted by banks due to the security receipts, facilitating provision write-backs.
If accepted, the deal with NARCL would streamline the process for Dalmia Bharat, dealing with only one entity instead of multiple banks. This could potentially accelerate the acquisition process. Acquiring Jaiprakash Associates’ assets would bolster Dalmia’s clinker base, positioning it as a pan-India player and potentially leading to a stock re-rating, according to Nomura.
Dalmia’s acquisition of Jaiprakash Associates’ cement assets worth Rs 5,600 crore has faced delays due to several issues, including legal disputes and negotiations with SAIL’s management. Despite these hurdles, the acquisition is expected to enhance Dalmia’s market presence and diversify its clinker base.
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