Dalmia Bharat Share Price Target at Rs 2,117: Prabhudas Lilladher Maintains "Accumulate" Ratings
Prabhudas Lilladher has reaffirmed an "Accumulate" rating on Dalmia Bharat Ltd (DALBHARA) with an upgraded target price (TP) of Rs 2,117. The research firm believes that despite weaker realizations and incremental cost pressures, Dalmia’s operating efficiency, upcoming capacity additions, and proactive cost control initiatives will drive margin expansion over the next two years. Analysts project a robust earnings recovery with EBITDA margins expected to improve substantially by FY27E. Investors are advised to accumulate on dips, considering the company’s strategic positioning and strong demand tailwinds in infrastructure-led cement consumption.
Muted Revenue, Strong Recovery in Q4FY25
Dalmia Bharat delivered a 5% YoY decline in revenue at Rs 40.9 billion in Q4FY25, impacted primarily by weak cement realizations in Southern India.
Volume growth rebounded 28% sequentially post the festive season, reaching 8.56 million tonnes, though marginally missing estimates.
Net Sales: Rs 40,910 million
Volume: 8.56 million tonnes
Average Cement Realization: Rs 4,779/tonne
Despite revenue pressure, the company's EBITDA surged 21% YoY to Rs 7.93 billion, supported by lower raw material and freight costs, and improved operating leverage.
Cost Rationalization Efforts Gaining Traction
A major highlight of Dalmia’s strategy is aggressive cost optimization:
Management expects Rs 150–200/tonne cost savings by FY27E, with 50% achievable in FY26E.
Key cost savings measures include:
Reduction in raw material costs: -20% YoY
Freight cost optimization: -2% YoY
Fuel consumption efficiency: Average consumption cost down to USD 95/tonne
However, Tamil Nadu’s imposition of a new limestone mineral tax (~Rs 130 crore annual impact) poses a fresh margin headwind, necessitating price hikes in key markets.
Capacity Expansions to Strengthen Market Position
The company is aggressively expanding its production footprint:
3.6 MTPA clinker unit in North-East to commission by Q2FY26.
Ongoing projects to expand total clinker capacity to 27.1 MTPA by FY26 end.
Roadmap to achieve 75 MTPA cement capacity by FY28E to be unveiled shortly.
The recent 2.4 MTPA capacity addition in Assam and new solar power plants will further bolster supply-side efficiencies and reduce energy costs.
Improving Financial Metrics and Revised Estimates
Following improved operational outlook, Prabhudas Lilladher has revised its financial estimates:
| Metric | FY26E | FY27E |
|---|---|---|
| Net Sales (Rs million) | 1,64,358 | 1,84,491 |
| EBITDA (Rs million) | 32,908 | 38,152 |
| EBITDA Margin (%) | 20.0% | 20.7% |
| EPS (Rs) | 71.8 | 79.1 |
| Revenue CAGR (FY25–FY27E) | 15% | |
| EBITDA CAGR (FY25–FY27E) | 26% | |
| PAT CAGR (FY25–FY27E) | 24% | |
The stock trades at 11.8x EV/EBITDA FY26E and 10.3x EV/EBITDA FY27E, reflecting reasonable valuations relative to growth prospects.
Stock Levels and Investment Strategy
Current Market Price (CMP): Rs 1,974
Target Price (TP): Rs 2,117
Upside Potential: ~7.2%
Support levels are seen at Rs 1,940 and Rs 1,900, with resistance at Rs 2,100 and Rs 2,150.
Prabhudas Lilladher suggests investors accumulate DALBHARA stock on corrections towards Rs 1,940 with a medium-term perspective.
Risks to Monitor
While prospects are robust, key risks include:
1. Sustained Weakness in Pricing:
Competitive intensity and aggressive expansions by peers could pressure realizations, especially in Southern India.
2. Rising Input Costs:
Increased limestone mining taxes and volatility in pet coke prices could limit margin expansion if cement price hikes are delayed.
3. Capacity Execution Risks:
Delays in commissioning new units or integration risks from potential inorganic moves like the Jaiprakash Associates acquisition could derail growth forecasts.
Management Commentary and Key Updates
Highlights from Q4FY25 conference call:
Industry demand grew 7–8% YoY in Q4, expected to sustain into FY26.
Price hikes in the South (~Rs 30–50 per bag) offer pricing tailwinds if maintained.
DALBHARA reported incentive accruals of Rs 3.36 billion in FY25, aiding profitability.
Net Debt/EBITDA remains at a comfortable 0.3x, ensuring strong financial flexibility.
Bottomline for Investors
Dalmia Bharat stands at an interesting juncture. With its proactive cost savings program, expanding production base, and stable balance sheet, the company is poised to capitalize on India’s infrastructure boom. Despite near-term margin pressures, DALBHARA’s operational excellence and strategic focus warrant an "Accumulate" stance for investors seeking exposure to India’s evolving cement landscape.
