Dalmia Bharat Navigates Q2 FY26 with Strong Profitability and Strategic Expansion

Dalmia Bharat Limited has demonstrated a resilient performance in the second quarter and first half of fiscal year 2026, showcasing robust profitability and a clear strategic roadmap for expansion. Despite a somewhat subdued market demand influenced by erratic weather and transitional impacts of GST rate changes, the company delivered impressive financial results, reinforcing its position as a cost leader in the Indian cement sector. The management's commentary highlights a proactive approach to market dynamics, focusing on operational efficiencies, sustainable growth, and disciplined capital allocation.

For Q2 FY26, Dalmia Bharat reported an EBITDA of ₹696 crore, marking a significant 60% year-on-year increase. The EBITDA per ton also saw a substantial jump of 56% year-on-year, reaching ₹1,013. This achievement underscores the company's ability to maintain a four-digit cement EBITDA per ton for the second consecutive quarter. Revenue for the quarter stood at ₹3,417 crore, an 11% year-on-year improvement, primarily driven by a 7.6% increase in Net Sales Realization per ton. While sales volume for Q2 FY26 was 6.9 MnT, a slight decline from the previous quarter, the half-yearly sales volume for H1 FY26 reached 13.9 MnT, reflecting a marginal year-on-year decline of 1.7%. The company's focus on profitable growth over mere volume expansion is evident in these figures.

Dalmia Bharat's strategic initiatives are heavily centered on capacity expansion and enhancing operational sustainability. The company is on track to achieve a total capacity of 75.0 MnTPA by FY28. Key projects include the 3.6 MnTPA clinker unit at Umrangso, Assam, which commenced trial runs in September 2025, with commercial production anticipated by Q3 FY26. This expansion is expected to unlock further grinding capacity in the fast-growing Northeast and East Indian markets. Additionally, the Belgaum (Karnataka) and Kadapa (Andhra Pradesh) projects, which will add 3.6 MnTPA clinker capacity and 6 MnTPA cement capacity each, are progressing as per schedule, with significant civil work and order placements already completed.

Driving Efficiency Through Renewable Energy and Cost Management

A cornerstone of Dalmia Bharat's strategy is its relentless pursuit of cost leadership and sustainability. The company's share of renewable energy in its power consumption mix increased to an impressive 48.1% in Q2 FY26. This was bolstered by the commissioning of 93 MW of new RE capacity, bringing the total operational RE capacity to 387 MW. The company aims to further scale this to 576 MW by the end of FY26. This focus on green energy not only reduces the carbon footprint but also provides a hedge against volatile fuel prices, contributing to long-term cost efficiencies.

Raw material costs per ton saw only a marginal increase of 1% year-on-year to ₹799, despite the imposition of a mineral tax by the Tamil Nadu government. Power and fuel costs per ton also remained relatively stable at ₹1,017. The management noted that petcoke/coal consumption costs remained range-bound at approximately $100 per ton. Furthermore, logistics costs per ton declined by 3.8% year-on-year to ₹1,060, demonstrating effective supply chain management and a continued focus on optimizing distribution. These efforts collectively ensure that Dalmia Bharat maintains its position as one of the lowest-cost cement producers in the industry.

Market Outlook and Policy Impact

The Indian cement industry is projected to grow at a CAGR of 7-8% over the next decade. While Q1 and Q2 FY26 experienced softer demand due to heavy rains and a temporary slowdown in inventory pickup post-GST rate changes, management anticipates a strong rebound in the second half of the fiscal year. This optimism is fueled by improved customer sentiment, pent-up demand, and the positive impact of the recent GST rate reduction on cement from 28% to 18%. The company has committed to passing on the entire benefit of this tax cut to consumers, which is expected to boost consumption and improve liquidity for channel partners across the supply chain.

Dalmia Bharat's financial discipline is also reflected in its debt management. The net debt to EBITDA ratio stood at a healthy 0.56x as of September 30, 2025, and the cost of borrowing decreased to 6.9%. The company declared an interim dividend of ₹4 per share, signaling confidence in its financial health and commitment to shareholder returns. Despite the ongoing capital expenditure for expansion, management is confident that the net debt to EBITDA ratio will remain comfortably below 2:1.

In conclusion, Dalmia Bharat Limited's Q2 FY26 performance underscores its strategic clarity and operational excellence. By prioritizing profitable growth, investing in sustainable capacity expansion, and maintaining a sharp focus on cost efficiencies, the company is well-positioned to capitalize on the anticipated demand recovery and long-term growth trajectory of the Indian cement industry. The management's transparent communication and disciplined execution instill confidence in the company's future prospects.