ICICI Securities has reiterated a BUY call on Dalmia Bharat, underlining the cement major’s accelerating operational recovery, disciplined cost control, and long-term capacity expansion roadmap. Despite near-term pricing pressures in select regions, the company delivered a strong Q3FY26 performance, driven by volume growth, operating leverage, and structural efficiency gains. Management’s reaffirmation of a 75 mtpa capacity target by FY28, coupled with improving EBITDA per ton and a conservative balance sheet approach, strengthens visibility on earnings compounding over the medium term. At current valuations, ICICI Securities believes the stock offers an attractive risk-reward proposition, supported by improving margins, rising return ratios, and sustained demand recovery across core cement markets.

ICICI Securities Maintains BUY, Sets Rs 2,650 Target

Research house view: ICICI Securities has maintained its BUY recommendation on Dalmia Bharat, assigning a target price of Rs 2,650, implying an upside of nearly 19% from the current market price of around Rs 2,230. The target is derived using an 11.5x EV/EBITDA multiple on the average of FY27E and FY28E earnings, which the brokerage believes is justified given the company’s scale-up strategy and improving profitability profile

Q3FY26 Performance Shows Volume-Led Recovery

Revenue and volume momentum: During Q3FY26, Dalmia Bharat reported consolidated revenue of Rs 3,506 crore, marking a 10.2% year-on-year increase, primarily driven by a 9% YoY rise in sales volumes to 7.3 million tonnes. Sequentially, volumes grew 5.8%, reflecting improved demand conditions following a subdued first half of the fiscal year
Pricing environment: Realisation growth remained muted at 1.2% YoY, with a sequential decline of 3%, largely due to aggressive price corrections in eastern and southern markets after the GST pass-through in September. Management indicated that early Q4FY26 has seen initial price recovery in select regions, though sustainability remains to be assessed

Margin Profile Reflects Structural Cost Discipline

EBITDA trajectory: EBITDA for the quarter rose 17.8% YoY to Rs 602 crore, even as sequential margins moderated due to seasonal and pricing pressures. EBITDA per ton stood at Rs 825, up 8.1% YoY, underscoring the impact of structural cost initiatives across fuel, logistics, and raw material sourcing
Cost optimization roadmap: Management reiterated its commitment to achieving Rs 150–200 per ton cost reduction over the next two years, with Rs 45–50 per ton already realised through operational efficiencies. Key levers include higher usage of alternative fuels, increased renewable energy adoption, improved blending ratios, and logistics optimisation

Profitability Accelerates Despite Volatility

PAT growth: Profit after tax surged 138.6% YoY to Rs 122 crore in Q3FY26, supported by operating leverage and lower base effects. On a nine-month basis, EBITDA per ton expanded sharply to Rs 1,029, compared with Rs 776 in the same period last year, reflecting sustained cost discipline across the value chain

Strategic Capacity Expansion Anchors Long-Term Growth

Capacity roadmap: Dalmia Bharat currently operates 49.5 mtpa of cement capacity and is executing a 12 mtpa expansion pipeline across Belgaum, Pune, and Andhra Pradesh. These projects are on track to lift total capacity to 61.5 mtpa by FY28, with management reaffirming its ambition to reach 75 mtpa by FY28E through further announcements in the coming quarters
Long-term vision: Beyond FY28, the company is targeting 110–130 mtpa capacity by FY31, positioning itself as a structurally stronger player across eastern, southern, and northeastern markets. ICICI Securities estimates an ~8% volume CAGR over FY25–FY28E, supported by improving utilisation and regional diversification

EBITDA Per Ton Seen Rising Sharply by FY28

Margin expansion outlook: ICICI Securities projects EBITDA per ton to rise to Rs 1,340 by FY28E, compared with Rs 819 in FY25, driven by operating leverage, energy efficiency, and premiumisation of product mix. Renewable power capacity has already reached 410 MW, with a stated goal of achieving 100% renewable usage by FY30

Financial Metrics Signal Earnings Compounding

Growth estimates: Over FY25–FY28E, ICICI Securities expects revenue CAGR of ~11%, EBITDA CAGR of ~27%, and PAT CAGR of ~44%, reflecting the combined impact of volume expansion, margin recovery, and operating leverage
Valuation comfort: The stock trades at 10.9x FY27E EV/EBITDA and 8.8x FY28E EV/EBITDA, levels that the brokerage considers attractive relative to peers, given Dalmia Bharat’s improving return ratios and balance sheet strength

Balance Sheet Strength Provides Strategic Flexibility

Capex and leverage: FY26 capex is estimated at Rs 2,700 crore, with annual spending of Rs 3,000–4,000 crore projected over FY27–FY28. Despite the aggressive expansion, management has committed to maintaining net debt to EBITDA below 2x, ensuring financial resilience through the cycle

Key Risks to the Investment Thesis

Risk factors: ICICI Securities highlights potential risks including a slowdown in cement demand, delays in capacity commissioning, volatility in fuel and commodity prices, and heightened competitive intensity in key markets. However, the brokerage believes Dalmia Bharat’s diversified regional footprint and cost leadership initiatives mitigate these risks over the medium term

Investment View: Scaled Growth with Margin Upside

Final assessment: ICICI Securities’ BUY stance on Dalmia Bharat reflects confidence in the company’s execution-led growth strategy, margin expansion trajectory, and disciplined capital allocation. With improving demand visibility, rising EBITDA per ton, and a clear path to capacity scale-up, the stock remains well-positioned for long-term investors seeking exposure to India’s infrastructure and housing-led growth cycle. Target price remains Rs 2,650 over a 12-month horizon.