Dalmia Bharat Ltd (DBL) has recently announced a capacity expansion plan involving the establishment of a 6 MTPA Grinding unit and a 3.6 MTPA Clinker unit. The total cost for this expansion project is estimated at Rs 3,520 Cr, which will be financed through internal accruals and debt. The company intends to set up a 3.6 MTPA clinker unit and a 3 MTPA grinding unit at its existing Belgaum plant in Karnataka. Additionally, a new greenfield split grinding unit with a capacity of 3 MTPA will be established in Pune, Maharashtra.
Analysts are optimistic about the growth prospects of Dalmia Bharat Ltd, forecasting a significant increase in volume, revenue, EBITDA, and PAT over the next few years. It is expected that the company will achieve a CAGR of 9/11/22/47 per cent in Volume/Revenue/EBITDA/PAT between FY25 and FY27, primarily driven by capacity expansion, market share gains, and operational efficiencies.
Furthermore, with the ongoing consolidation and capacity expansion initiatives within the industry, it is anticipated that the market share of top players, including Dalmia Bharat Ltd, will reach 65-70 per cent by FY27-28. This trend is expected to have a positive impact on cement pricing, economies of scale, and supply chain efficiency, benefiting companies like DBL in the medium to long term.
Currently, the stock of Dalmia Bharat Ltd is trading at attractive valuations of 11x/10x FY26E/FY27E EV/EBITDA and EV/tonne of $80 & $77. Following a recent correction in the stock price, analysts maintain a Buy rating on the stock with a target price of ₹2,180.
Overall, Dalmia Bharat Ltd is well-positioned to benefit from the industry consolidation and capacity expansion, making it a favorable investment opportunity for investors looking to capitalize on the growth potential of the cement sector.
