Dalmia Bharat volume growth and JAL ramp-up support outlook despite cost pressures

Investment View and Valuation

Geojit Investments Limited maintained its BUY rating on Dalmia Bharat Ltd. in its August 10, 2026 company update, titled “Volumes Drive Growth, Margins Remain Soft”. The broker’s positive outlook is based on the expected ramp-up of the acquired JAL assets from Q3 FY27, continued volume growth above the industry rate and Dalmia Bharat’s geographic expansion into central India.

Geojit believes these factors, alongside the company’s longer-term ambition to become a pan-India cement producer, can support a valuation re-rating. The broker values Dalmia Bharat at 12 times EV/EBITDA and derives a target price of Rs 2,278.

Q1 FY27 Operating and Financial Performance

Dalmia Bharat reported consolidated Q1 FY27 sales of Rs 3,890 crore, up 7.0 per cent year-on-year but down 8.4 per cent sequentially. Cement volume increased 8.6 per cent year-on-year to 7.6 MT, compared with estimated industry demand growth of 7-8 per cent, although volume declined 13.6 per cent quarter-on-quarter.

Realisation, including ready-mix concrete, was Rs 5,118 per tonne, down 1.5 per cent year-on-year and up 6.1 per cent sequentially. EBITDA declined 8.8 per cent year-on-year to Rs 805 crore, while EBITDA margin contracted 360 basis points year-on-year to 20.7 per cent. The margin weakness reflected elevated input costs, including higher power and fuel and other expenses.

Adjusted PAT fell 15.1 per cent year-on-year to Rs 324 crore, while reported PAT fell 52.2 per cent to Rs 188 crore. Reported PAT was affected by Rs 182 crore of JAL acquisition-related expenses as well as higher interest and depreciation from the debt-funded acquisition.

Cost Outlook and JAL Asset Ramp-Up

Management expects input costs to increase by around Rs 70-80 per tonne sequentially in Q2 FY27, keeping cost pressure elevated. However, management indicated that price hikes helped partly offset cost inflation. Dalmia Bharat maintained its FY27 incentive guidance of Rs 200 crore after recording Rs 45 crore of incentive accruals in Q1 FY27.

Management expects the acquired JAL assets to make a meaningful volume contribution from Q3 FY27, turn EBITDA-neutral within a couple of quarters and reach EBITDA per tonne in line with Dalmia Bharat’s average over the following 7-8 quarters. Gross debt rose to Rs 9,108 crore following the acquisition, although management expects net debt to EBITDA to remain comfortably below 2 times.

Capital Expenditure and Capacity Expansion

Dalmia Bharat has retained its FY27 capital expenditure guidance of Rs 3,200-3,400 crore. This includes around Rs 2,200 crore for ongoing expansion projects and Rs 200 crore for Jaypee asset improvement and efficiency spending.

Following the Jaypee acquisition and expansions at Belgaum, Kadapa and Pune, cement capacity is expected to rise from around 54.7 MT currently to around 67 MT by Q3 FY28. Management’s longer-term directional capacity target is 110-130 MT by FY31, subject to industry conditions and capital-allocation discipline.

Depreciation is expected to increase by Rs 100 crore in FY27 and by a further Rs 100-250 crore in FY28 as acquired assets and expansion projects are commissioned.

Geojit’s Financial Forecasts

Geojit forecasts consolidated revenue of Rs 16,452 crore in FY27E and Rs 18,510 crore in FY28E, with EBITDA of Rs 3,285 crore and Rs 3,978 crore respectively. EBITDA margin is forecast at 20.0 per cent in FY27E before improving to 21.5 per cent in FY28E.

Key Risks to the Outlook

• Sustained input-cost inflation.
• The pace and profitability of the JAL asset ramp-up.
• Higher depreciation and interest costs.
• Execution of the expansion programme.