Dalamia Bharat Ltd Quarterly Results Q4 FY 25 stock analysis

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Sector Outlook: Positive

Sequential recovery aided by Eastern performance and cost efficiencies

Dalmia Bharat Ltd. reported an operating revenue of Rs. 40,910 million (up 28.6% QoQ / down 5% YoY). The annual decline in revenue was mainly due to subdued cement prices, particularly in the southern region. However, an increase in volumes and prices in the East led to a sequential improvement in revenue. The company’s cement volumes declined on a YoY basis but improved quarterly, with total sales reaching 8.6 MT (up 28% QoQ / down 2.8% YoY). Freight costs during the quarter stood at Rs. 9,720 million (up 30% QoQ / down 5% YoY). The annual reduction was due to an increase in direct dispatch from 56% in Q4FY24 to 61% in Q4FY25 and a decrease in lead distances; however, costs remained high sequentially due to significant clinker movement to the Northeast region caused by the unplanned shutdown of the Rajgangpur, Odisha plant. Power and Fuel costs stood at Rs. 7,730 million (down 2% QoQ / up 16% YoY). The annual increase was driven by higher power and fuel prices. However, the overall cost was partially offset by an increase in the share of renewable energy from 34% to 39%. The company reported EBITDA of Rs. 7,930 million (up 55.2% QoQ / up 21.3% YoY), which improved due to better cost management during Q4FY25. Its EBITDA margin stood at 19.4%, up from 15.2% for the same quarter in the previous year and from 16.1% in the last quarter. The company’s EBITDA per ton increased to Rs. 926 in Q4FY25 from Rs. 765 in Q3FY25 and Rs. 743 in Q4FY24. The company’s profit improved significantly during the quarter, reaching Rs. 4,390 million (up 565% QoQ / down 37.2% YoY) aided by the accrual of Rs. 990 million in incentives with total collections of Rs. 1190 million during the quarter. Financially, the company remained strong, reducing its net debt-to- EBITDA ratio from 0.55x in Q3FY25 to 0.3x in Q4FY25. The Board has proposed a final dividend of Rs. 5 per share, subject to the shareholders’ approval at the upcoming AGM, in addition to the interim dividend of Rs. 4 per share. The total declared dividend for the year, including the interim, amounts to Rs. 9 per share.

Key Concall Highlights

Capacity Expansion:

Dalmia Bharat commissioned Phase 1 of the 49.5 MTPA expansion milestone, including a 2.4 MTPA grinding unit in Lanka, Assam, and a 0.5 MT grinding unit in Bihar in Q4FY25. The commissioning of the Lanka unit establishes it as the largest cement producer in the rapidly growing Northeast region. These units are expected to be commissioned by the end of FY27 and will primarily serve emerging markets in Maharashtra, aligning with its vision to establish a pan-India cement company. The clinker unit at Tumarangshu is nearing completion and is expected to be commissioned in Q2FY26. By the end of FY25, the company’s clinker capacity was 23.5 MT. The company will provide full details of its capacity creation plan until FY28 in Q1FY26 and explain how that will impact its balance sheet. The company focuses on creating capacity instead of increasing its utilization, aiming to balance profitability and volume growth in the upcoming quarters. It will develop capacity in markets that maintain a cost-competitive position and a better cost structure to serve the market.

Pricing and Volumes:

Cement prices improved during the quarter. They improved in the eastern region, while in the South, they stayed low. On average, prices remained flat with a slight uptick. Volume growth from Dalmia plants was 6%, compared to industry growth of around 4-5%.

Cost Optimization Strategies:

The company is working on different strategies, including consuming more renewable energy, improving its heat and power consumption rates, and optimizing logistics to reduce costs. Raw material costs were reduced due to reduced fly ash and limestone costs. As we advance, raw material costs will see an additional impact from the tax on minerals imposed by Tamil Nadu. The company continues to increase renewable power capacity through captive and group captive methods and expects to achieve 595 MW of operational RE capacity by the end of FY26.

CapEx Plans:

The company has set a CapEx guidance at Rs. 35 billion for FY26, with the majority allocated to expansions in Belgaum and Pune, the Clinker Line at Tumarangshu, and some land for future projects. It also includes investments focused on cost efficiency and maintenance CapEx.

Other Key Concall Highlights:

Premium product mix improved to 24% from 21% in Q4FY24, and the trade mix improved to 67% from 65% last year.

The company is focusing more on creating capacity instead of increasing its utilization, aiming to balance profitability and volume growth in the upcoming quarters

Valuation and Outlook

Dalmia Bharat Ltd. showed a strong sequential recovery during Q4FY25, driven by improved demand in the East and effective cost controls. However, annual comparisons remained lower due to pricing pressure in the South. The company’s performance during the quarter reflects operational resilience amid regional pricing challenges. Prices will likely be further impacted in the South due to the taxes imposed on minerals like limestone in Tamil Nadu, which has led the management to remain cautiously optimistic. However, improved cement prices in other regions of the country are expected to offset this price impact in the South, thereby improving the overall cement pricing. The company is focusing on improving its operational efficiency, eventually reducing costs and improving margins. Notably, the management remains focused on long-term cost reduction (Rs. 150-200/ton over two years), reinforcing its position as one of the lowest-cost producers in the sector. On the strategic front, the company is committed to expanding its capacity to 75 MTPA by FY28, with recent additions in Assam and Bihar and new announcements in Belgaum and Pune. While near term challenges persist, we expect Dalmia’s performance to improve due to structural improvements and a prudent expansion strategy, positioning it well for sustainable long-term growth.