Cement Upturn:

DALBHARAT

Targets 75 MTPA Capacity by FY28

India’s cement cycle is showing early signs of recovery, and

is positioning itself to benefit. After muted demand in October and November, volumes have picked up in December, with management guiding for mid-to-high single-digit growth in Q3FY26. While near-term pricing pressures weigh on realizations, capacity expansion and industry recovery are expected to support medium-term growth. - Q2FY26 volumes rose 3% YoY to 6.9 mt, in line with industry growth. - H1FY26 saw a 1.6% decline, but management expects H2FY26 growth to align with industry trends. - Near-term demand recovery is visible, aided by seasonal factors and infrastructure activity. - Installed capacity stood at 49.45 mtpa at end-Q2FY26. - Targeting 75 mtpa by FY28 through brownfield and greenfield projects. - Timely execution of expansions is critical to capture rising demand. - About 60% of capacity is in the east (including North-East) and 34% in the south. - Brokerage PL Capital notes Dalmia remains a price play in these regions, where intense competition limits market share gains. - Risks include potential delays in achieving medium-term capacity targets due to Jaiprakash Associates deal-related issues. - Non-trade segment prices fell ₹20–25 per bag, likely reducing blended realizations by 3–4% sequentially. - Non-trade sales include bulk orders from government and infrastructure buyers. - Management prioritizes field-level execution over chasing volumes. Shares declined ~10% in past three months, reflecting pricing ***** Global expects pricing conditions to improve from January in east and south markets. Despite near-term challenges, shares are up 16% YTD in 2025, trading at ~11x FY27e EV/EBITDA, offering reasonable valuations.