Dalmia Bharat: Cost relief ahead, near-term pain remains

Dalmia Bharat Ltd expects input costs for the cement industry to soften in the coming quarters after West Asia tensions eased. The impact of recent disruptions will still weigh on earnings through the first half of the fiscal year, the company’s chief financial officer said.

“Cost escalations are coming down,” CFO Dharmendra Tuteja told shareholders at the company’s 13th annual general meeting on Tuesday. He called the ongoing US-Iran peace talks a “positive development” but said the war’s effect would linger through April-September before moderating. “Q1 and Q2 will be affected,” Tuteja said, adding that price hikes should help offset higher costs and protect margins.

The company had flagged war-related cost pressures during its Q4FY26 earnings, estimating a ₹125-150 per tonne rise in the April-June quarter over the preceding quarter because of higher fuel, power, logistics and packaging expenses. Its FY26 annual report warned that geopolitical uncertainties could affect input costs, supply chains and market stability.

Near-Term Earnings Hit

Brokerage Equirus Securities sees some relief on the fuel side. Analyst Raghav Maheshwari said Q1FY27 could deliver around 7% volume growth year-on-year, “indicating a better than expected quarter.” Fuel costs, including pet coke, have declined to $133-134 per tonne in the June quarter from an earlier peak of $155-160 per tonne, he noted. Supply chain restoration should happen in or after the September quarter.

“The impact of West Asia war-related costs would come through mostly in the June month during Q1, and also Q2, before moderating in the latter half, as de-escalation in the West Asian region continues,” Maheshwari said.

In FY26, Dalmia Bharat’s net profit jumped more than 65% to ₹1,158 crore, helped by better realizations and a moderate rise in costs. A ₹337 crore deferred tax charge trimmed the gain. Revenue from operations rose about 6% to ₹14,804 crore, while volume growth remained muted at 2% to 30 million tonnes.

Capacity Build-Out

Managing Director Gautam Dalmia said the company remains confident about India’s long-term growth despite geopolitical uncertainties. Dalmia Bharat is investing more than ₹10,000 crore to expand capacity from 49.5 mtpa currently to 66.7 mtpa by FY28.

Strategic investments of over ₹6,800 crore will add 12 million tonnes per annum of cement capacity at Belgaum, Pune and Kadapa, targeting white spaces in the company’s stronghold southern markets and deeper penetration into western markets. Combined with the ₹2,850-crore acquisition of Jaiprakash Associates Ltd’s cement business and another ₹550 crore earmarked for refurbishment and efficiency upgrades, the committed capital outlay exceeds ₹10,000 crore.

The JAL acquisition adds 5.2 mtpa through plants in Rewa (Madhya Pradesh) and Churk, Chunar and Sadwa (Uttar Pradesh), strengthening Dalmia Bharat’s presence in central India. The company plans to spend ₹300 crore over the next year on refurbishing the acquired assets and another ₹250 crore over the next two years on operational efficiency. The expansion is being funded through internal accruals and debt.

Dalmia said the Belgaum project is at an advanced stage, while the Pune and Kadapa projects are largely on schedule. Installed capacity should rise to 60.7 mtpa by the end of FY27 after integrating the JAL assets and commissioning Belgaum and Pune. Capacity will reach 66.7 mtpa in FY28 when the Kadapa plant starts.

“Over FY27 and FY28, as per announced plans, the company will expand its capacity by nearly 35%, from 49.5 million tonnes per annum to 66.7 million tonnes per annum, positioning Dalmia Bharat as a truly pan-India player,” Gautam Dalmia said.

India’s installed cement capacity stands at about 720 mtpa, according to BigMint. UltraTech Cement leads with 200 mtpa, followed by Adani Cement (109 mtpa) and Shree Cement (65.8 mtpa). Dalmia Bharat is the fourth-largest player.