Choice Institutional Equities has kept its BUY recommendation for Dalmia Bharat (DALBHARA) and left the target price unchanged at ₹2,405 per share. The brokerage highlighted the company’s ambitious capacity expansion to 110‑130 MTPA, with 12 MTPA slated for commissioning by Q3 FY28. It also praised the supportive pricing environment, disciplined capital allocation and the synergy potential from the JP Assets acquisition.
The firm expects cost pressures to stay manageable, noting a forecasted cost headwind of ₹100‑120 per tonne in Q2 FY27E. It believes a favourable pricing backdrop will offset most of this impact, while ongoing cost‑optimisation and a higher share of renewable energy should help curb rising power costs. As a result, Dalmia Bharat is projected to achieve FY27E EBITDA per tonne of ₹972.
Choice Institutional projects an EBITDA CAGR of 9.0% from FY26 to FY29E, driven by volume growth of 4.0%, 6.0% and 8.0% and realisation growth of 3.5%, 1.5% and 1.0% over the same period. The target price is based on an EV/CE valuation using a 1.6× multiple for FY28E. The brokerage also highlighted the company’s resilient margin profile despite near‑term cost pressures.
In Q1FY27, Dalmia Bharat posted consolidated revenue of ₹3,890 crore and EBITDA of ₹805 crore, beating estimates of ₹3,728.7 crore and ₹705 crore respectively. Total sales volume reached 7.6 million tonnes, slightly above the projected 7.5 million tonnes. Realisation per tonne came in at ₹5,118, down 1.5% YoY but up 6.1% QoQ, while total cost per tonne rose 3.2% YoY and 6.9% QoQ, resulting in EBITDA per tonne of ₹1,059 versus the estimated ₹941.
The brokerage sees a constructive outlook for infrastructure‑led demand, expecting recovery after the seasonal slowdown. It points to PMAY execution, infrastructure spending and improving urban housing activity as key drivers. Although pricing remains favourable, cost inflation remains a key risk to monitor.
Dalmia Bharat outperformed the industry with a 9% year‑on‑year volume growth to 7.6 million tonnes. The premiumisation strategy continues to deliver, with premium product mix hitting an all‑time high of 25%. Trade contribution remains healthy at 66% and blended cement share stays above 80%.
Raw material inflation remains high, while fuel cost pressure is largely contained due to inventory management and operational initiatives. Fixed cost inflation, driven by annual wage revisions and higher packaging costs, has weighed on profitability. The firm remains cautious about potential fluctuations in pet coke and coal prices and supply disruptions from geopolitical events.
Fast integration of the JP Assets acquisition demonstrates strong execution capability, with commercial dispatches from Chunar starting within 22 days of the deal. Capacity expansion remains on track, with installed cement capacity expected to rise from 54.7 million tonnes to 66.7 million tonnes by Q3 FY28. Brownfield projects are expected to support superior capital efficiency, and the company’s Net Debt/EBITDA ratio stays at 1.47×, providing headroom for further capex.
Choice Institutional flags potential volatility in pet coke and coal prices, as well as supply disruptions due to geopolitical events, as key risks to its investment thesis. Despite these risks, the brokerage maintains its positive outlook for Dalmia Bharat.