Dalmia Bharat Shares Dip, but Leading Brokerages Remain Bullish on Stock; Here’s Their Verdict

Dalmia Bharat’s share price experienced a decline of over 4% during morning trade on the BSE, as of October 17. Despite this setback, the stock remains significantly stronger than the broader equity benchmark Sensex, having achieved a gain of about 48% in the past year, compared to Sensex’s 14% increase over the same period.

The drop in Dalmia Bharat’s share price occurred despite an optimistic outlook from several brokerage firms following the company’s Q2 earnings report.

Q2 Results Recap:

Dalmia Bharat reported a 6.6% YoY increase in volume to 6.2 million tonnes (MnT) in Q2FY24. The company also recorded a 6% YoY growth in revenue, reaching ₹3,149 crore, and saw its EBITDA/T increase by 46% YoY to ₹955/T. The net debt/EBITDA ratio stood at 0.59 times.

Dalmia Bharat attributed its 55% YoY EBITDA growth, reaching ₹589 crore, to lower fuel prices, greater utilization of renewable energy, and improved key performance indicators.

The company’s cement capacity expanded to 43.7 MnT, while its clinker capacity reached 22.2 MnT during the same quarter.

Dalmia Bharat declared an interim dividend of ₹4 per share.

Positive Brokerage Views:

Despite the decline in share price, multiple brokerage firms maintained their positive outlook on Dalmia Bharat’s stock following its Q2 performance:

1. Jefferies: The firm reiterated a “buy” rating and increased the target price to ₹2,680 from ₹2,440. Jefferies reported that Dalmia Bharat has observed price increases of ₹40-50 per bag in the east region and ₹30 per bag in the South during Q3. While cost savings in fuel and freight were significant in Q2, further savings may be limited, as energy costs are expected to rise. The company anticipates a reversal of recent volume underperformance and expects an improved second half of FY24, driven by sustainable price hikes.
   
2. Kotak Institutional Equities: The firm maintained an “add” recommendation with a higher target price of ₹2,350, up from ₹2,220. Kotak acknowledged the lower volume growth in Q2 and made a 3% reduction in the FY24 EBITDA estimate. Despite this, the firm highlighted attractive risk-reward prospects due to enhanced capital allocation, growth visibility, and favorable valuations.
   
3. HDFC Securities: With an unchanged target price of ₹2,560 (based on 13 times Sep-25E consolidated EBITDA), HDFC Securities continued to recommend buying Dalmia Bharat shares. The firm commended the company for its robust volume, margin, and balance sheet outlook. Despite sub-par volume growth in Q2, the company recovered in terms of unit EBITDA, with a ₹85/MT increase quarter-on-quarter and a ₹300/MT increase year-on-year to ₹955/MT. HDFC Securities anticipated a 15% volume CAGR from FY23-26E, supported by ongoing expansions. It estimated that unit EBITDA would surpass ₹1,000/MT starting H2FY24, benefiting from reduced fuel costs, a growing share of green power, and operational leverage gains as utilization increased.
   
4. Nirmal Bang: The firm maintained a “buy” rating on Dalmia Bharat and revised its target price to ₹2,908. Nirmal Bang’s assessment considered potential risks such as price rollbacks, premiumization, and the ability to withstand intense competition in core markets.

Despite the share price decline, the overall outlook from these brokerage firms remains optimistic, emphasizing Dalmia Bharat’s strong potential for growth in the cement sector.