Why Is Motilal Oswal Bullish on Dalmia Bharat Despite Near-Term Cost Pressures?
Dalmia Bharat Ltd reported a stellar Q2 FY26 performance with healthy operating metrics and strong margin expansion, reaffirming Motilal Oswal’s Buy call. The brokerage expects the company’s medium-term outlook to stay solid, driven by volume recovery, operational efficiency, and capacity expansion projects.
EBITDA jumped nearly 60% YoY to ₹700 crore, aligning with estimates, while PAT surged 329% YoY to ₹240 crore — about 11% above expectations — aided by higher other income and lower tax outgo. The EBITDA per tonne improved to ₹1,009, with OPM expanding 6.3 percentage points YoY to ~20%.
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The management confirmed that GST rate cuts have been fully passed on to consumers and expects a strong demand recovery in 2H FY26 after a monsoon-affected 1H and GST transition period. Petcoke price increases and INR depreciation may add short-term cost pressure, but the focus remains on optimizing variable costs and logistics.
Dalmia Bharat Q2 FY26 Key Metrics
| Metric | Value | YoY / Notes |
|---|---|---|
| EBITDA | ₹700 cr | +60% |
| EBITDA / t | ₹1,009 | +56% |
| PAT | ₹240 cr | +329% |
| Operating Margin | ~20% | +6.3 pp |
| Target Price | ₹2,660 | Maintain Buy |
Capacity expansion projects at Belgaum and Kadapa remain on track and are expected to support medium-term volume growth. Motilal Oswal has raised FY27 EPS estimates by ~6% due to lower depreciation and interest assumptions, valuing the stock at 13× Sep’27E EV/EBITDA to reach a target of ₹2,660.
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Dalmia Bharat continues to enhance efficiencies through cost optimization, alternative fuels, and supply-chain improvements. The focus on sustainability and green cement remains intact, reinforcing its long-term competitive positioning.
Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, believes Dalmia Bharat’s execution strength and operating leverage make it a long-term value compounder within the cement sector. Rising capacity and cost controls could support margin sustainability into FY27.
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Related Queries on Dalmia Bharat Outlook
- What Supports Dalmia Bharat’s Margin Expansion in FY26?
- How Will Belgaum and Kadapa Projects Drive Growth?
- Why Did Motilal Oswal Raise Dalmia’s FY27 EPS Estimate?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
