Dalmia Bharat is in a sweet spot on pricing, but will demand play along?

Even as demand in these areas remained patchy, prices rose by ₹35 per bag and ₹12 per bag, respectively, over the March quarter (Q4FY25) average, only seeing marginal rollbacks in June, as per PL Capital. This is remarkable, especially given early monsoons this year and a generally muted consumption backdrop in the east.

For Dalmia, which has nearly 80% of its capacity concentrated in these two zones, the pricing uptick is good news. In a report on 26 June, PL Capital said it estimates an Ebitda per tonne jump of ₹200–250 sequentially, pushing it closer to the ₹1,100 per tonne mark. That’s a solid recovery from the ₹819 Ebitda per tonne it managed in FY25, a year marred by falling realisations and flat volumes.

A large part of this confidence stems from the management’s continued focus on cost efficiencies. A targeted ₹150–200 per tonne savings over the next two years, through higher renewable energy mix and lower logistics costs, could strengthen margins even if prices don’t stay elevated. About half of these savings are expected to materialize in FY26.

 

Volume growth, however, continues to be a sore spot. Despite the company’s aspirations to outpace the industry, actual volumes have stagnated at around 29 million tonnes (mt) for the last two years.The management, in its Q4FY25 call, has steered clear of offering any specific volume guidance for FY26, choosing instead to focus on striking a balance between growth and profitability.

A meaningful pickup will depend on post-monsoon demand and easing of supply imbalances, particularly in the east, where demand has now been weak for five consecutive quarters.

Kotak Institutional Equities expects industry demand to recover to about 8% and 7% in FY26 and FY27 after a tepid FY25, largely due to elections in H1FY25.

“Organic expansion plans suggest an 8% capacity addition for the industry in FY26E, which could bring prices under pressure in H2FY26," said Kotak’s analysts in a report on 25 June.

 

Meanwhile, Dalmia isn’t shying away from expansion plans. A ₹3,500 crore investment to add 3 million tonnes per annum (mtpa) each via greenfield expansions at Pune and Belgaum is underway. That will push total capacity to 55.5 mtpa. The eventual target? A mammoth 75 mtpa by FY28, and 110–130 mtpa by FY31.

To get there, Dalmia may need more than just greenfield builds. The company has re-entered the race for Jaiprakash Associates’ cement assetsafter its previous bid didn’t go through. The stakes are higher this time, and so is the competition. Winning the deal would accelerate Dalmia’s capacity ambitions but also saddle it with non-core assets it will have to divest quickly.

For now, the company is set to be a key beneficiary of higher prices in the southern and eastern regions in H1FY26. “Incorporating recent price increases and annual report 2025, we upgrade our Ebitda estimates by 4.4% and 6% for FY26 and 27. We expect Dalmia Bharat to deliver revenue/Ebitda/PAT CAGR of 14%/30%/58% over FY25-27E on low base of FY25," said PL Capital.

Dalmia’s shares hit a new 52-week high of ₹2,217 apiece in early trade on Friday. The stock trades at 11.8x EV/Ebitda based on FY27 estimates, which isn’t exactly cheap. But if Dalmia can pull off its volume comeback while sustaining price momentum, there could be further headroom for valuations to expand.