Dalmia Bharat Q1: Third consecutive quarter of double-digit volume growth

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

Sachin Pal
Moneycontrol Research

Dalmia Bharat, India’s fourth largest cement maker, delivered another quarter of strong double-digit volume growth. Stable cement prices and richer product mix boosted revenue for the quarter gone by. Profit margin dipped marginally quarter-on-quarter as the company managed input price pressures with effective cost management.

The company continues to deliver industry leading volume growth in the sector. It has been consistently outperforming peers and gradually expanding its presence by setting up capacity as well as by acquiring existing plants.

Robust quarterly performance aided by volume growth
Quarterly revenue rose 16 percent year-on-year to Rs 2,368 crore. It sold 4.5 million tonne of cement during Q1, a volume growth of 13 percent YoY. Strong demand across all markets (east, northeast and south) drove volume growth.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) margin declined 490 basis points YoY as cement companies in general are facing higher input costs. The prices of raw materials (fly ash and slag), power and fuel as well as freight expenses have risen steeply over the last 12 months.

Realisations increased 3 percent quarter-on-quarter (QoQ) as the company benefited from higher sale of premium products and moderate uptick in cement prices. The sector continues to face a challenging environment on the margin front as the company reported a unitary cost increase of 4 percent on a sequential basis.

The sharp jump in costs was primarily on account of higher employee (5 percent QoQ and 3 percent YoY) and power and fuel expenses (1 percent QoQ and 22 percent YoY). The company has increased focus on operating efficiencies and cost rationalisation measures (change in fuel mix, reduction in lead distance etc).  This resulted in a 13 percent QoQ decline in selling and distribution expenses.

In 2016, Dalmia merged Orissa Cement into it under a share swap agreement, which helped increase capacity by 5.4 million tonne. The merger is anticipated to be complete by Q3 FY19.

The company is in the final stages of acquiring two companies - Kalyanpur Cement and Murli Industries - under the National Company Law Tribunal insolvency process. These two acquisitions will add 4.1 MT of capacity and expand its reach to regions around Bihar and Maharashtra.

Dalmia has paid a total consideration of Rs 353 crore for acquisition of Kalyanpur Cement (1.1 MT capacity) and expects to commence production over the next few months. It is still awaiting NCLT clearance on Murli Industries acquisition.

The management is planning to double capacity in the eastern region by adding about 8 MT for Rs 3,700 crore. The project will be executed in phases and will be spread across Odisha, West Bengal and Bihar.

During the quarter gone by, strong cash flow from operations helped it reduced its net debt by Rs 85 crore. Net debt at the end of the quarter stood at Rs 3,425 crore.

Outlook and recommendationWith pick-up in infrastructure, overall demand outlook for cement looks robust. With majority of industry players nearing 80 percent capacity utilisation, prices are expected to rise after the monsoon.

The company is gradually expanding its presence across other key markets and expects to ramp-up volumes from the revival of Kalyanpur Cement and Murli Industries. Strong demand in eastern markets should help the company clock double-digit volume growth over the course of the current fiscal.

While the industry has been facing input cost pressures, Dalmia has been able to sustain healthy margin through operating efficiencies. Strong cash flows and acquisition synergies should help pare debt and improve return ratios.

The company delivered its third consecutive quarter of double-digit volume growth and remains our preferred pick in the sector. We expect it to outperform its peers in the largecap cement space.