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Dalmia Bharat Ltd

| Q4 FY26 Earnings Conference Call

BULLISH SENTIMENT

Report Source

⬤1st May 26

Summary : Dalmia Bharat reported record FY26 EBITDA and PAT, with ambitious capacity expansion plans and strong cost management, despite geopolitical cost headwinds.

Management Perspective positive : Management expressed happiness and highlighted India's strong growth story."We are optimistic that this positive momentum on prices will continue in the near term and could well mitigate the impact of the cost impact.""We delivered our best-ever EBITDA of Rs 3,083 crores and a PAT of Rs 1,157 crores.""We are very optimistic that we'll get back to our sales growth momentum and, outperform the industry in the coming quarters.""We've never been more excited about the future as we are now."

Concall Report Analysis & Insights

Business Overview

  1. Fourth-largest cement player in India with almost 50 million tons capacity.
  2. Achieved best-ever EBITDA of INR 3,083 crores and PAT of INR 1,157 crores in FY26.
  3. Diverse product offering, adding new premium product "Weather 365".
  4. Sufficient limestone reserves (2.7 billion tons) for future expansion.
  5. Strong balance sheet with net debt-to-EBITDA of 0.46x.

Future Growth Prospects

  1. Cement demand expected to grow at 7-8% CAGR in the medium term.
  2. Targeting 75 million tons capacity by FY28, working on new projects.
  3. Ongoing expansion projects at Belgaum, Pune, and Kadapa.
  4. Aiming to deliver volume growth better than the industry average.
  5. Increasing renewable power capacity to 576 megawatts.

Management Insights

  1. "India growth story remains strong, marching forward to become the third-largest economy."
  2. "Expect cement demand to grow at a CAGR of 7% to 8% in the medium term."
  3. "Optimistic that positive momentum on prices will mitigate cost impact."
  4. "Delivered best-ever EBITDA of INR 3,083 crores and PAT of INR 1,157 crores in FY26."
  5. "Committed to highest corporate governance and strong organization culture."

Signs of Skepticism

  1. Management was reluctant to provide specific details on future capex breakdown beyond broad categories.
  2. Specifics on fuel mix in Q4 and future capacity additions beyond 75 MT were not disclosed.
  3. Kadapa project experienced minor delays, pushing commissioning to Q3 FY28.
  4. Management did not quantify the total price hike taken in April.

Risk Factors

  1. West Asia conflict causing cost impact on power, fuel, packing bags, and logistics.
  2. Petcoke prices soared to $160 per ton, exacerbated by Rupee depreciation.
  3. Potential cost inflation of INR125-150 per ton in Q1/Q2 due to external factors.
  4. Minor delays in Q4'26 project cash outflows and Kadapa project commissioning.
  5. Volatile environment for power and fuel costs.

Good To Know

  1. Progress in ED land attachment case reduced alleged proceeds of crime by 90%.
  2. Improved DJSI score to 70 this year, reflecting sustainability efforts.
  3. Scaling renewable power capacity, adding 180 megawatts this year.
  4. Total contingent liability as percentage of equity is 6%, among the best in the industry.
  5. Refreshed brand identity and adopted a new logo.

Key Drivers

  1. Strong Indian economy growth.
  2. Aggressive capacity expansion plans.
  3. Commitment to cost leadership.
  4. Successful premium product launches.

Key Analyst Discussions

Competitive Environment

  1. Industry expected to add 160-170 million tons capacity by 2028.
  2. Industry utilization for FY26 estimated at 65-70%.
  3. Company aims to grow volume ahead of the industry.

Market Trends & Consumer Behavior

  1. April demand seems to be holding up, but slowdown effects may appear in H2.
  2. Demand growth is expected to be decent for the full year.
  3. No immediate weakening of individual home builder (IHB) demand observed.

Financial Highlights

  1. Management targets INR50-100 annual cost reduction.
  2. Expected Q1/Q2 cost inflation of INR125-150 per ton.
  3. FY27 capex guidance is INR3,200-3,400 crores, including current liabilities.
  4. Reconciliation of fixed asset change vs. capex outflow due to deferred cash flows.

Product Composition

  1. Aggressively driving premiumization agenda in FY27.
  2. Premium product share was 24% in Q4.

Strategic Considerations

  1. Targeting 75 million tons capacity by FY28 remains unchanged.
  2. IEX investment is a non-core asset to be liquidated at the right opportunity.
  3. Considering grinding capacity addition in the Northeast region.
  4. Sustainability is central to company operations and growth.