Dalmia Bharat Receives Buy Recommendation from Prabhudas Lilladher with Target Price of Rs 2287

Dalmia Bharat Reports Strong Q4FY26 Performance

Dalmia Bharat (DALBHARA) has posted a better-than-expected operating performance in Q4FY26, driven by improved realisations and well-controlled costs. Despite a modest volume miss due to a one-off kiln breakdown, the company's average Net Sales Realisation (NSR) improved by 1.5% quarter-on-quarter, primarily due to price hikes in key regions.

The company's operating performance remained strong, with lower freight costs led by higher direct dispatches and stable power & fuel costs aided by a higher renewable energy share. This resulted in an EBITDA per ton of INR1,025, exceeding Prabhudas Lilladher's estimated INR938. While input cost pressures persist due to elevated pet coke prices and logistics inflation, Dalmia Bharat's continued focus on cost optimisation and improving pricing environment should support margin resilience going forward.

The company has achieved approximately INR100 per ton in cost reduction in FY26, with management targeting further savings of INR50-100 per ton in FY27 through ongoing efficiency initiatives.

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Outlook

We have revised our FY27/28E EBITDA estimates for Dalmia Bharat, incorporating lower volumes, higher costs, and higher prices. Our forecast now expects 11% EBITDA compound annual growth rate (CAGR) over FY26-28E in an inflationary environment.

At the current market price, the stock is trading at 11.2x/9.3x Enterprise Value (EV) of FY27/FY28E EBITDA. We maintain a 'BUY' recommendation with a revised target price of Rs2,287 (earlier Rs2,250), valuing the company at 11x EV of Mar'28E EBITDA.

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