Broker’s Call: Dalmia Bharat (Buy)
HDFC Securities
Dalmia Bharat's management highlighted the ongoing cost pressures within the cement industry, with the company unable to pass on cost increases due to competitive pressures. As a result, Q2FY27E is projected to witness single-digit volume growth and a slight decline in realization compared to the previous quarter, while unit opex is expected to rise by ₹250-300/mt.
This could lead to a margin reduction of around ₹750/mt, down from the previous ₹1,055/1,013 per mt. The management expressed confidence in achieving 40 per cent/60 per cent utilization in Q4FY27 and FY28E, respectively. Organic expansion projects in the South and West regions are progressing as planned and are anticipated to come online in phases between Q4FY27 and Q3FY28E, leading to a consolidated capacity of 67 mt.
In July, Dalmia emerged as the successful resolution applicant for Bhilai Jaypee Cement (BJCL) under CIRP, acquiring two operational cement units in Bhilai and Babupur. The company anticipates a total capital expenditure of ₹13,500 crore for FY27-29E and expects its net debt to EBITDA to reach a peak of 2.5x in FY27E. The analysts project a volume and EBITDA CAGR of 12 per cent/11 per cent for FY26-29E.
The buy recommendation is set at ₹2,110 per share, which is 12 times Dalmia Bharat's consolidated EBITDA for September 2028.
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