Why Is HSBC Positive on Dalmia Bharat as Cement Demand and Prices Improve?
About Dalmia Bharat’s Q3 Performance
Dalmia Bharat reported a marginal miss in Q3, largely due to a modest EBITDA shortfall, even as volumes remained strong year-on-year. Brokerage commentary suggests the underlying demand environment is improving, with operating leverage expected to support profitability as the cycle turns more favourable in the coming quarter.
Cement demand saw a sharp rebound from December, enabling producers to initiate price hikes across key southern and eastern markets—regions where Dalmia Bharat has meaningful exposure.
Key Highlights From HSBC’s View
🔹 Buy rating reiterated with a target price of ₹2,740
🔹 Q3 EBITDA miss seen as transient rather than structural
🔹 Strong volume growth underscores healthy underlying demand
🔹 Price increases gaining traction across South and East India
HSBC expects Q4 to benefit from better pricing and operating leverage as utilisation improves, helping offset cost pressures and lift margins sequentially.
Market participants aligning cyclical stocks with index trends often track Nifty Trading View.
Regional Demand and Pricing Snapshot
| Region | Current Trend |
|---|---|
| South India | Price hikes following demand recovery |
| East India | Improving volumes and pricing discipline |
| Overall | Sequential recovery supporting margins |
The company’s regional mix provides an advantage in the current phase, as southern and eastern markets lead the demand recovery, supporting both volumes and realizations.
|
Structural Positives
🔹 Strong regional exposure 🔹 Volume-led demand recovery 🔹 Operating leverage benefits |
Risks to Monitor
🔻 Energy and freight cost volatility 🔻 Regional pricing competition 🔻 Demand sensitivity to infra spending |
Valuation and Near-Term Outlook
HSBC views current valuations as attractive, particularly given improving regional demand, expected margin recovery in Q4, and the company’s favourable cost structure. The brokerage believes the near-term earnings trajectory is set to improve as pricing actions take effect.
Investors tracking banking and cyclical linkages alongside cement stocks often refer to BankNifty Trading View.
Investor Takeaway
Derivative Pro & Nifty Expert Gulshan Khera, CFP®, believes Dalmia Bharat is entering a more supportive phase of the cement cycle, driven by regional demand recovery and improving pricing discipline. While cost pressures remain a monitorable, operating leverage and favourable exposure to South and East India enhance the company’s medium-term earnings visibility. More structured market insights are available at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries on Dalmia Bharat
Is cement demand recovering in India?
How do price hikes impact cement margins?
Why is South and East India leading the recovery?
Are cement valuations attractive now?
What risks could affect cement profitability?
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.
