Dalmia Bharat’s fortunes tied to pricing in East, while Q3 sees demand improvement
Dalmia Bharat expects mid-to-high single-digit volume growth in Q3FY26 as demand improves, but muted pricing in the east and south continues to cap near-term upside for the stock.
India’s cement cycle is showing early signs of recovery, and Dalmia Bharat Ltd is positioning itself to ride the upturn.
Dalmia Bharat is bracing for mid-to-high single-digit volume growth in the December quarter (Q3FY26). After a sluggish October and November, demand traction has improved this month, management told analysts. Volume rose about 3% year-on-year to 6.9 million tonnes (mt) in Q2FY26, broadly in line with industry growth.
The company expects H2FY26 volume growth to align with the industry, a reversal from the 1.6% decline it reported in H1FY26. Over the medium term, volume growth is likely to be supported by ongoing capacity additions through brownfield and greenfield projects. Timely execution of these expansions will be crucial to meet the expected rise in near-term cement demand.
Capacity roadmap
Dalmia Bharat’s total installed cement capacity stood at 49.45 million tonnes per annum (mtpa) at the end of Q2FY26, and it is targeting 75 mtpa by FY28. However, PL Capital, in a report dated 19 December, noted that the company remains largely a price play in the near term, given that about 60% of its capacity is in the eastern region, including the North-East, and 34% in the southern markets.
“We believe Dalmia Bharat, in the near-term, remains a price play on the eastern and southern regions as intense competition from leaders continues to limit market share expansion," the brokerage said. It also cautioned that the company faces the risk of missing its medium-term capacity targets due to issues related to the Jaiprakash Associates deal.
Pricing pressure
Pricing trends remain subdued and are contingent on demand improvement in the key eastern and southern markets. Management said a sharp fall of ₹20–25 per bag in Q3FY26-to-date in the non-trade segment across these regions is likely to lower blended realisations by 3–4% sequentially in Q3FY26.
Dalmia continues to prioritise better field-level execution over chasing volumes, particularly in the eastern region. The non-trade segment includes bulk sales made directly to large buyers such as the government or major infrastructure and real estate companies.
Stock view
Dalmia Bharat’s stock has declined about 10% over the past three months. According to Emkay Global Financial Services, the pricing weakness in the non-trade segment during Q3FY26 so far is largely reflected in the current stock price.
Based on recent channel checks, Emkay expects industry pricing conditions to improve from January, particularly in the east and south. A sustained price hike could support sentiment towards the stock. That said, Dalmia Bharat’s shares are up 16% so far in 2025 and trade at around 11x FY27 estimated EV/Ebitda, according to Bloomberg data.
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