The Value Of Dalmia Bharat Stock After Group Rejig

Dalmia Bharat Ltd. rejigged the group structure to bring all its cement assets under one entity, and the combined firm is expected to re-list soon.

Dalmia Bharat is expected to list between Jan. 28 and 31, Puneet Dalmia, group managing director, had told BloombergQuint in Davos, Switzerland on the sidelines of the World Economic Forum. The consolidated structure will add 100 basis points to Ebitda margin, he said.

The consolidation is expected to result in enhanced cash flow and improved float, and trading liquidity for the stock, according to Prateek Kumar, analyst at Antique Stock Broking. It will simplify the corporate structure from six subsidiaries to two and number of listed entities will reduce from two to one.

How Restructuring Works

Existing Structure

• Dalmia Bharat is the holding company for its 100-percent subsidiary Dalmia Cement Bharat Ltd.
• Dalmia Cement owned 75 percent in publicly listed OCL India Ltd. and 76 percent in Calcom Cement India Ltd.

After Restructuring

• OCL India merged with Dalmia Cement Bharat; OCL will cease to exist
• Dalmia Cement will hold 76 percent stake in Calcom Cement.

Key Highlights Of The Merger Scheme

• October 2018: OCL India delisted
• December 2018: Dalmia Bharat delisted
• December 2018: OCL India listed as Odisha Cement
• December 2018: OCL allocates 17.83 crore shares to Dalmia Bharat

Cancellation of 4.24 crore shares of Dalmia Bharat cross-held by OCL India.

• January 2019: Record date for share allotment and share cancellation

Once the restructuring is complete, Dalmia Bharat will have 19.2 crore outstanding shares.

Dalmia Bharat’s share traded 2.1 times the OCL India’s stock in the last year before the delisting. Based on that, the market capitalisation of the combined entity should be Rs 22,763 crore, according to BloombergQuint’s calculations. That means each share is worth Rs 1,185.

Here’s how shareholding structure will change after restructuring: