Dalmia Bharat Faces Margin Headwinds: Jefferies Trims Target Price Amid Energy Cost Surge

Market snapshot: Dalmia Bharat (DALBHARAT) is currently navigating a challenging cost environment. Global brokerage Jefferies has maintained its 'Buy' rating on the stock but lowered its target price from ₹2,620 to ₹2,500. This adjustment reflects a anticipated surge in energy costs originating from West Asia, which is expected to drive a significant increase in production expenses.

Summary: Jefferies retains 'Buy' on Dalmia Bharat but cuts TP to ₹2,500 due to a projected ₹300/t cost inflation and a 4-9% EBITDA downgrade for FY27-28.

Key Takeaways

• Variable cost inflation of approximately ₹300 per tonne expected between 4QFY26 and 2QFY27.
• Jefferies has slashed EBITDA estimates by 4% to 9% for the fiscal years 2027 and 2028.
• Limited immediate pricing power in the cement market restricts the company's ability to pass on rising costs to consumers.

SAHI Perspective

The downgrade in target price is a cautionary signal for the near term, specifically regarding margin compression. However, the retention of the 'Buy' rating suggests that Dalmia's long-term capacity expansion goals and market positioning in the East and South remain fundamentally strong despite the cyclical energy price shock.

Closing Insight

While the ₹300/t cost headwind is significant, Dalmia Bharat's operational efficiency and ongoing capacity additions provide a safety net for long-term investors.

High Performance Trading with SAHI.