Overview
The fourth-largest cement manufacturer in India, Dalmia Bharat, released a poor set of results for the October–December 2024 period. This is because the cement industry’s overall demand is still weak because of weak consumer mood and a slowdown in housing and infrastructure development.

Q3 Result Highlights
The most recent third-quarter results from Dalmia Bharat Limited disappointed overly enthusiastic predictions by missing earnings. Overall, the outcome wasn’t great with statutory earnings missed predictions by an astounding 62%, coming in at just ₹3.25 per share, while sales was only slightly below analyst estimates at ₹32b. Investors may monitor a business’s performance, examine what analysts predict for the upcoming year, and determine whether sentiment toward the company has changed, making earnings a crucial moment for them.

The quarter’s total volume was 6.7 MT, a 2% decrease from the previous year. Volumes in the previous quarter were negatively impacted by the termination of tolling agreements with Jaiprakash Associates, labor shortages during the holiday season, a slow market environment, and insufficient government spending. Due to excess industry capacity and intense competition, realisations fell 10% year over year, even though the price situation improved sequentially. Revenues for the third quarter were Rs 3,181 crore, a 12% year-over-year (YoY) decrease.

The softening of fly ash, slag, and limestone prices resulted in favorable input costs. The decrease in power and fuel costs was driven by a shift in the fuel mix, a sharp decline in the price of coal and pet coke, and a greater contribution from green energy. As the corporation used its eastern factories to service the central markets, freight costs increased slightly. Poor realisations caused operational earnings to drop 34% year over year to Rs 511 crore from Rs 779 crore, despite a 4% YoY fall in the entire cost base.

Industry expectation
Cement prices across the board have been declining since Q3 of FY25, and they showed same patterns in October and November. However, because dealers had started raising prices in December, realizations were stronger, therefore the quarter concluded on a good note. During the busy construction season (January to June), the sector anticipates a rise in realizations driven by a pickup in demand.

On a sequential basis, the average power and fuel price for Q3 was $96/tonne, a decrease from $101/tonne. The cost curve should flatten here as the current spot costs for fuel and electricity are between $95 and $100 per tonne.

Capacity to boost
The business’s total capacity at the end of the quarter was 46.6 MT, following the start of commercial production in Ariyalur (1MT) and Kadapa (1MT). By the end of FY25, the company wants to reach a capacity of more than 49.5 MT. Of the approximately Rs 3,000 crore in investment guidance for the entire fiscal year FY25, Rs 2,000 crore has already been spent in the first nine months of FY25.

Through the utilization of captive coal blocks, route optimization, and a higher percentage of renewable energy (RE), Dalmia hopes to reduce costs by Rs 150–200/tonne over the course of the next three years. Dalmia inked 21 MW of RE power agreements in Q3FY25, bringing its total captive RE power contracts to almost 300 MW.

Share Price Movement
The stock price movement is expected to be significantly impacted by the near-term difficulties, which include increased competition in its core markets and restricted growth prospects as a result of the postponed capacity expansion plan. Supported by a better blending ratio, green power share, and lower freight cost, the company is one of the least expensive producers in the sector. The company is selling at 11x/10x FY26E/FY27E EV/EBITDA and USD82/USD80 EV/t at CMP, which is an appealing price. In order to arrive at our revised TP of INR2,100 (as opposed to the previous TP of INR2,250), analysts value DALBHARA at 12x Dec’26E EV/EBITDA.

Future Outlook
Dalmia continues to be our top choice among major cement firms, despite the company’s limited short-term development potential. Over the medium to long term, the company is anticipated to outperform the industry. This stock is worth keeping an eye on for long-term investors looking to buy on dips.