Hold Dalmia Bharat Ltd for the Target Rs. 2,450 by JM Financial Services Ltd
Takeaways from the JM Financial Promoter Conference
We hosted Mr Puneet Yadu Dalmia, promoter and MD & CEO of Dalmia Bharat, at the JM Financial Promoter Conference. The key takeaways from the interaction are: 1) The company reiterated its cement capacity expansion targets from current ~50mt to 75mt by FY28; 2) Capacity expansion of 7.2mt of clinker and 12mt of cement will take its total clinker and cement capacities to ~34mt and ~62mt, respectively, by 2QFY28; 3) Focus is on enhancing brand equity with improving quality of sales and price positioning; 4) Remains optimistic about continued firmness in cement prices; 5) Targeting sustainable cost reduction of INR 150-200/tn over the next 2 years. 6) Aims to maintain net debt to EBITDA <2x. We maintain HOLD rating with TP of INR 2,450 based on 12.5x Sep’27 EV/E.
* Announced expansion to increase clinker and cement capacity to ~34mt and ~62mt respectively by 2QFY28: Dalmia is undertaking a total capex of ~INR 68bn to add 7.2mt of clinker and 12mt of cement capacity (USD 75/tn assuming CC ratio at 1.4x) in South and West regions. Accordingly, its clinker and cement capacities will increase by 46% and 24% respectively by 2QFY28. This capacity addition will strengthen its presence in Andhra Pradesh, Karnataka, and Maharashtra. Besides, a 3mt bulk terminal at Chennai is expected to cater primarily to northern Tamil Nadu.
* Reiterates cement capacity target of 75mt by FY28: With the commissioning of a 3.6mt clinker unit at Umrangso, Assam, by 3QFY26, the company will turn clinker-surplus in the North-East (clinker/cement capacity of 6.3mt/8mt). It also plans to add a 2-2.5mt GU in the region, which is expected to be commercialised within 12–15 months. In addition, Dalmia is progressing on a proposed 6mt cement plant in Jaisalmer to strengthen its presence in North India, with land acquisition completed and environmental clearance under process. The project’s timeline is expected to be reviewed later this year, contingent on the outcome of its bid for JP assets, though the management remains confident of commissioning it by Mar’28 if pursued. Capex guidance has been maintained at ~INR 40bn annually over the next 2 years.
* Manoeuvring between volumes and profitability: Dalmia Bharat’s consolidated volume declined 6% YoY to 7mt in 1Q; however, adjusted for JP volume in the base quarter, volume was broadly flat YoY. The company continues to prioritise profitable growth by channelising its efforts on quality sales and enhancing brand equity. The management continues to be optimistic on cement prices remaining firm, supported by improving demand prospects over the coming quarters.
* Sustainable cost savings potential of INR 150-200/tn over the next 2 years, driven by higher renewable energy (RE) share, commencement of captive coal mining, logistics optimisation (with ~50% of savings expected from increased direct dispatches and reduced lead distance), and a greater mix of blended cement. The company aims to nearly double its RE capacity to 576MW by FY26-end, from 294MW as of Jun’25.
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SEBI Registration Number is INM000010361
