Top Conviction Ideas : Buy Dalmia Bharat Ltd for Target Rs. 2,550 - Axis Securities Ltd
* The company announced a fresh capacity expansion plan involving a 6 MTPA cement unit and 3.5 MTPA clinker unit at Kadapa and a 3 MTPA bulk terminal in Chennai, with a capital outlay of Rs 3,287 Cr, targeted to be operational by Q2FY28. Additionally, the earlier announced 6 MTPA capacity addition (3 MTPA each in Pune and Belgaum) aimed at catering to the western region is progressing well and is expected to be commissioned by Q4FY27. With improved utilisation and incremental capacity coming onstream, the company is projected to deliver a 7% volume CAGR over FY25–27E
* It is expected that the company will enhance its EBITDA margins to 21-22% over FY26EFY27E, driven by improved operating efficiency, higher sales of premium products, increased trade sales, and stable realisations. Pricing remains a key monitorable.
* The Indian cement industry is witnessing a wave of consolidation, with larger players acquiring regional or mid-sized firms to enhance market presence, optimise logistics, and achieve cost synergies. This consolidation trend is expected to reduce competitive intensity, enabling better price discipline and margin stability across the sector. The company, with its strategic focus on profitable growth through selective capacity expansion, focus on high-margin regions, improved product mix (e.g., blended cement), and disciplined capital allocation, is wellpositioned to capitalise on this industry shift.
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