India's cement sector is showing initial signs of a rebound, and Dalmia Bharat Ltd is gearing up to capitalize on the emerging upturn. The company anticipates its cement volume to grow by a mid-to-high single-digit percentage in the third quarter of the fiscal year 2026 (Q3FY26). This follows a period of sluggish demand in October and November, with traction picking up in December, as conveyed by the management to analysts.
Volume Recovery and Capacity Expansion Plans
In the previous quarter (Q2FY26), Dalmia Bharat's volume increased by approximately 3% year-on-year to 6.9 million tonnes, aligning with broader industry growth. The company now expects its performance in the second half of FY26 (H2FY26) to match the industry's pace, marking a reversal from the 1.6% decline reported in the first half (H1FY26).
Supporting this medium-term outlook are ongoing capacity additions through brownfield and greenfield projects. Dalmia Bharat's total installed capacity was 49.45 million tonnes per annum (mtpa) at the end of Q2FY26, with an ambitious target of reaching 75 mtpa by FY28. Timely execution of these expansions is viewed as critical to meeting the anticipated near-term surge in cement demand.
Regional Pricing Dynamics and Market Strategy
A significant factor influencing Dalmia Bharat's near-term fortunes is its geographical exposure. Brokerage firm PL Capital, in a report dated 19 December, highlighted that about 60% of the company's capacity is situated in the eastern region (including the North-East), with another 34% in the southern markets. This concentration makes the company's performance heavily dependent on pricing trends in these areas.
The management reported continued pricing pressure, noting a sharp fall of ₹20–25 per bag in the non-trade segment during Q3FY26 so far across the east and south. This segment includes bulk sales to large entities like government bodies and major infrastructure firms. As a result, blended realizations are projected to drop by 3–4% sequentially in Q3FY26.
In response, Dalmia Bharat is prioritizing better field-level execution over chasing volumes, especially in the competitive eastern region, where intense rivalry from larger players limits market share expansion.
Stock Performance and Future Sentiment
The company's shares have felt the impact of these headwinds, declining by about 10% over the past three months. Analysts at Emkay Global Financial Services believe the current stock price largely reflects the recent pricing weakness in the non-trade segment.
However, there is a glimmer of optimism. Based on recent channel checks, Emkay expects industry pricing conditions to improve from January 2026, particularly in the challenging east and south markets. A sustained price hike could positively influence sentiment towards the stock. Despite recent pressures, Dalmia Bharat's shares are still up 16% so far in 2025 and trade at around 11 times the estimated EV/EBITDA for FY27.
The brokerage also cautioned about potential risks to the company's medium-term capacity targets, which could be affected by issues related to the pending Jaiprakash Associates deal.
