Dalmia Bharat sees easing cost pressures, stays the course on expansion

Dalmia Bharat Ltd expects input costs for the cement industry to soften in coming quarters as tensions in West Asia ease, but the impact of recent disruptions is likely to weigh on the company’s earnings in the first half of the financial year.

“Cost increases are coming down,” Dharmendra Tuteja, the company’s chief financial officer, said in response to shareholders’ questions at the company’s 13th annual general meeting on Tuesday.

Tuteja said the ongoing US-Iran peace talks and the easing of tensions in West Asia were “positive developments”. But the impact of the war will continue to be felt throughout April to September before easing, the CFO said.

“Q1 and Q2 will be impacted,” he said, adding that the company hopes price increases will help offset higher costs and maintain margins.

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The country’s fourth largest cement producer in terms of capacity stated that there were war-related cost pressures in its earnings in the fourth quarter of 26QFY26 and said that costs could increase by 2019. ₹125-150 per tonne in the April-June quarter compared to the previous quarter due to higher fuel, energy, logistics and packaging expenses. The FY26 annual report also warned that geopolitical uncertainties could impact input costs, supply chains and overall market stability.

Dalmia Bharat can expect volume recovery in FY27 with increased capacity, brokerage firm Equirus Securities said in a June 30 note.

“We may see around 7% volume growth in Q3FY27, indicating a better-than-expected quarter on an annual basis,” said Raghav Maheshwari, cement industry analyst at Equirus Securities.

Fuel costs, including pet coke prices, fell to a range of $133-134 per tonne in the June quarter from the previous peak of $155-160 per tonne, indicating some softening, he said. Supply chain restoration should occur in the September quarter or later.

“The impact of war-related costs in West Asia will mostly occur in the first quarter and also in the second quarter in June, but will ease in the second half as tensions in the West Asia region continue to ease,” he said.

The company’s net profit increased by over 65% in FY26. ₹1,158 crore due to better realizations and moderate increase in costs. It affected your profit ₹337 crore deferred tax expense. Net profit is ₹699 crore in FY25.

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Revenue from operations increased approximately 6% ₹14,804 crore in FY26, while volume growth remained muted, rising 2% to 30 million tonnes (MT).

Expansion plans

Outlining Dalmia Bharat’s capital expenditure plans over the next two years, managing director Gautam Dalmia said the company is confident about India’s long-term growth despite geopolitical uncertainties.

The company invests more ₹10,000 crore to increase capacity from 49.5 mtpa currently to 66.7 mtpa by FY28.

“We also announced over 200 strategic investments. ₹6,800 crore to add cement capacity of 12 million tonnes per annum to serve the white areas in the southern markets, where we have strongholds in Belgaum, Pune and Kadapa, and to penetrate deeper into the western markets.” Dalmia said the company aims to transform itself into a pan-India player beyond the traditional south, east and north-east markets.

combined with ₹2,850 crore acquisition of cement business of Jaiprakash Associates Ltd (JAL) and another ₹With ₹550 crore earmarked for renovation and efficiency upgrades, the company’s committed capital expenditure exceeds: ₹10,000 crore.

The acquisition of JAL strengthens the company’s presence in central India by adding 5.2 mtp annual capacity through facilities at Rewa in Madhya Pradesh and Churk, Chunar and Sadwa in Uttar Pradesh.

The company plans to spend ₹300 crore next year for renewal of acquired assets and another ₹250 crore over the next two years to improve operational efficiency.

The expansion program is financed through a combination of domestic accruals and debt.

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Dalmia said the Belgaum (Karnataka) project is at an advanced stage of completion, while the Pune (Maharashtra) and Kadapa (Andhra Pradesh) projects are largely on schedule.

Following integration of JAL assets and commissioning of Belgaum and Pune projects, its installed capacity is expected to rise to 60.7 mtpa by the end of FY27. Once the Kadapa plant is commissioned, the capacity will increase to 66.7 mtpa in FY28.

“During FY27 and FY20, as per the announced plans, the company will increase its capacity by around 35% from 49.5 million tonnes to 66.7 million tonnes per annum, positioning Dalmia Bharat as a true pan-India player,” he said.

According to BigMint, India’s installed cement capacity currently stands at around 720 mtpa. UltraTech Cement maintains its market leadership with an installed capacity of 200 mt/year, followed by Adani Cement (including Ambuja, ACC and other brands) with 109 mt/year. Shree Cement is at the third position with 65.8 mtpa, while Dalmia Bharat is the fourth largest player.