Dalmia Bharat reported a 9% rise in cement volumes to 7.6 million tonnes for Q1 FY27, helped by recent acquisitions. However, profitability came under pressure as EBITDA margins dropped by 360 basis points to 20.7%, largely due to higher fuel and operating expenses. The company continues to invest in capacity expansion with a capital spending target of up to Rs 3,400 crore for the fiscal year.
Detailed Coverage
Dalmia Bharat, one of India's leading cement manufacturers, released its financial results for the first quarter ending June 2026. The company achieved a 9% year-on-year increase in cement volumes, reaching 7.6 million tonnes. This growth was driven by the company's expanded market reach and successful integration of recently acquired assets. Revenue for the quarter rose 7% to Rs 3,890 crore. Despite the healthy growth in sales volume, the company faced a challenging quarter regarding profitability.
Impact of Rising Operational Costs
While sales grew, the company's profitability saw a notable decline. The EBITDA margin, which reflects the company's core operating profitability, contracted by 360 basis points to 20.7% compared to the same period last year. A significant factor in this margin squeeze was the rise in energy costs. Power and fuel expenses per tonne increased by 7% to Rs 1,045, pressured by higher fuel prices. Additionally, the company reported higher employee costs and increased spending on packing materials. Consequently, the EBITDA per tonne, a key metric for cement companies, fell 16% year-on-year to Rs 1,059.
Expansion and Acquisition Strategy
Dalmia Bharat is currently in a phase of aggressive growth. A major highlight for the company is the acquisition of the cement business of Jaiprakash Associates for Rs 2,850 crore. This deal adds 5.2 million tonnes per annum (MTPA) of cement capacity and 3.3 MTPA of clinker capacity, strengthening the company's presence in central India. Dalmia Bharat is currently upgrading these acquired facilities, aiming for the assets to reach an EBITDA-neutral position by the third quarter of this fiscal year.
The company is also pursuing organic growth through new clinker and grinding unit projects. These combined efforts are part of a larger plan to reach an installed capacity of 67 MTPA by the third quarter of FY28, with a long-term goal of 110 MTPA by FY31. To support these projects, the management has guided for capital spending between Rs 3,200 crore and Rs 3,400 crore for the full financial year.
Outlook and Monitorables
The company expects fuel-related cost pressures to persist into the next quarter, projecting a cost inflation of Rs 70-75 per tonne for Q2 FY27. While cement demand in India is expected to grow by roughly 7% for the year, largely supported by government infrastructure spending, the near-term profitability will remain sensitive to energy prices and the time taken to fully optimize the newly acquired plants. Investors may continue to track the pace of asset integration, the actual capital spending versus guidance, and whether the company can pass on cost increases to customers as demand trends evolve.