Dalmia Bharat bears the brunt of weak demand, cost inflation in Q2

Profitability was hit by weak volumes, sequentially lower realizations and input cost inflation. Ebitda per tonne slid to a multi-quarter low of ₹694. A further fuel cost impact of ₹75-80 per tonne is likely in Q3, along with additional costs of ₹100-125 per tonne associated with ramping up the acquired JaiPrakash Associates cement assets. Antique Stock Broking cut its FY27-29 Ebitda estimates by 7-11% and cautioned that the profitability gap versus peers is likely to widen further.

Dalmia expects improving cement prices in its key eastern and southern markets, along with operating leverage, to partly offset the pressure. It sees Ebitda per tonne potentially recovering to ₹1,000 in Q3, provided recent price hikes of around ₹15 per bag sustain, alongside benefits from improved fixed-cost absorption and a better regional mix. It is hopeful of a demand recovery and volume growth in line with the industry at around 7-8% in H2FY27, aided by timely capacity additions.

Dalmia is on track to reach 67mtpa of grinding capacity by the end of FY28, with Belgaum, Pune and Kadapa scheduled to be commissioned in Q4FY27, Q2FY28 and H2FY28, respectively. Its expanding capacity base, including central India assets, strengthens its pan-India presence, but capacity utilization needs to improve. “Over FY21-FY26, capacity grew at a 10% CAGR, outpacing volume growth of 7.7%, highlighting the importance of improving utilisation to maximise returns from the expanded capacity base,” said Nirmal Bang Institutional Equities.

Capacity utilisation at 62%/61% in FY25/FY26 and 58% in H1FY27 was below industry levels, it added. Of the FY27 capital expenditure target of ₹3,200-3,400 crore, ₹1,420 crore was spent in H1. Leverage has inched up amid capacity expansions. Net debt rose to ₹5,722 crore, taking net-debt/Ebitda to 2x from 1.5x in Q1. Dalmia is committed to maintaining net-debt/Ebitda below 2x on a sustainable basis.

So far in 2026, the stock is down 29%, trading at an FY28 EV/Ebitda multiple of 9.37x, in line with its five-year average, showed Bloomberg data. However, the scope for a re-rating is low.