Detailed Narrative
Q3 FY26 Operational Performance Highlights
Dalmia Bharat Limited delivered a robust Q3 FY26, achieving a sales volume growth of 9.5% YoY, reaching 7.3 million tons. This strong performance translated into a 10% YoY improvement in revenue. The company's EBITDA per ton stood at Rs. 823, contributing to an absolute EBITDA of Rs. 602 crores, marking an 18% YoY increase. Despite these gains, the Net Sales Realization (NSR) experienced a 4% QoQ drop due to softening prices in key operating regions.
Cost Efficiency and Renewable Energy Integration
The company continues its focus on cost leadership, aiming for a Rs. 150-200 per ton cost take-out. Structural cost reductions of Rs. 45-50 per ton have already been achieved. Raw material cost per ton increased by only 2% YoY to Rs. 780, and power and fuel cost per ton by 1% YoY to Rs. 1,019, despite cost headwinds. Renewable energy (RE) now accounts for 48% of consumption, with 23 MW commissioned this quarter, bringing total RE capacity to 410 MW. Logistic costs saw a significant decline of 5.6% YoY, supported by a 62% direct dispatch percentage.
Capacity Expansion and Long-Term Growth Strategy
Dalmia Bharat is actively pursuing its ambitious capacity expansion plans. The new clinker line at Umrangso in Assam, with 3.6 million tons clinker and 2.4 million tons grinding capacity, has commenced commercial production. The Belgaum-Pune and Kadapa expansions are progressing on schedule, aiming to reach a total capacity of 61.5 million tons. The company remains on track to expand its presence to 75 million tons by FY28 and has a long-term ambition of 110-130 million tons by 2031, with the Jaisalmer project decision expected in the next few months.
Pricing and Market Dynamics Outlook
While Q3 saw softening of prices, particularly in the East and South, management noted some upward corrections in January. The company believes that prices should be supportive in the mid to long term, driven by industry consolidation and rising barriers to entry. The overall cement demand for FY26 is projected to grow by about 6% YoY, with Q4 expected to see high single-digit growth. The East region is anticipated to grow at 7-8% due to low per capita consumption and government focus on infrastructure.
Capital Allocation and Financial Health
The company incurred a CAPEX of Rs. 513 crores in Q3 FY26, bringing the YTD spending to Rs. 1,703 crores. The full-year FY26 CAPEX is projected to be around Rs. 2,700 crores, with FY27 CAPEX estimated at Rs. 4,000 crores, and Rs. 8,000-9,000 crores for FY27-FY28. Gross debt stood at Rs. 6,844 crores, and net debt at Rs. 1,793 crores, resulting in a strong net debt to EBITDA ratio of 0.6X. The company received Rs. 121 crores in incentives this quarter, reducing outstanding incentives to Rs. 776 crores, with an expected run rate of Rs. 200 crores for next year.
Indian Economy and Cement Sector Context
The Indian economy demonstrated strong resilience with 8.2% GDP growth in Q2, and the Reserve Bank of India projects 7.3% growth for the current fiscal. Continued government investments in infrastructure are expected to support cement demand. The sector's all-India capacity utilization is around 70%, with capacity growth of 5-6% per annum and demand growth of 7-8% per annum. Management believes that overcapacity is likely to persist in the near future, but long-term pricing should improve due to consolidation and increasing costs of new capacity.