Dalmia Bharat Predicts ₹100 Crore Depreciation Rise In FY27 From Jaypee Plants

Market snapshot: Dalmia Bharat expects a sharp rise in full-year depreciation by ₹100 crore in FY27 due to the commissioning of newly acquired Jaypee cement plants and the commercialization of its Belgaum capacity. The trend is projected to intensify in FY28 with an incremental depreciation charge of ₹100 crore to ₹150 crore as the company commissions its key greenfield and brownfield projects in Kadapa and Pune.

Data Snapshot

• Consolidated net profit for Q1 FY27 halved year-on-year to ₹192 crore, primarily impacted by higher operating costs and acquisition expenses.
• Consolidated revenue grew by 7% year-on-year to ₹3,890 crore for the quarter ended June 30, 2026.
• Sales volume increased by 9% year-on-year to 7.6 million tonnes during Q1 FY27.
• The company booked an exceptional loss of ₹182 crore in Q1 FY27, mainly linked to costs from its recent acquisition of Jaiprakash Associates' cement assets.

What's Changed

• In Q1 FY27, net profit dropped 51% to ₹192 crore compared to ₹395 crore in Q1 FY26 due to cost inflation and exceptional acquisition-related expenses.
• Revenue rose to ₹3,890 crore in Q1 FY27, up 7% from ₹3,636 crore in Q1 FY26.
• Sales volume expanded to 7.6 million tonnes, registering an 9.2% increase from 7.4 million tonnes in Q1 FY26.

Key Takeaways

• Depreciation rise of ₹100 crore is anticipated in FY27 as newly acquired assets and Belgaum operations commence commercial activities.
• A further depreciation increase of ₹100 crore to ₹150 crore is guided for FY28 due to the commissioning of Pune and Kadapa units.
• An exceptional loss of ₹182 crore directly impacted bottom-line performance in the June quarter, masking a healthy 9% volume growth.

SAHI Perspective

Dalmia Bharat's aggressive inorganic expansion is accelerating its pan-India presence but at the cost of short-term profitability. The forecasted surge in depreciation over FY27 and FY28 will depress operating margins in the near term. However, the strong 9% growth in sales volume suggests healthy underlying market demand, which could support margin recovery once the newly acquired Jaypee assets are fully integrated and optimized.

Market Implications

The combination of higher depreciation guidance and squeezed profitability due to exceptional charges is likely to keep the stock price under consolidated pressure in the near term. Analysts will closely monitor the company's ability to extract operational synergies from the Jaypee assets to offset the higher capital charges.

Trading Signals

Market Bias: Neutral

Strong volume growth of 9% and revenue growth of 7% offset the short-term margin compression caused by ₹182 crore in exceptional costs. A massive guided increase in depreciation will act as a key performance drag over FY27-28.

Overweight: Infrastructure, Housing

Underweight: Cement (undergoing margin pressure)

Trigger Factors:

• Ramp-up of acquired Jaypee cement assets in Central India
• Commissioning of the Kadapa and Pune expansion projects
• Input cost movement (specifically pet-coke and coal prices)

Time Horizon: Medium-term (3-12 months)

Industry Context

The Indian cement sector is experiencing rapid consolidation, with major players aggressively scaling capacities through inorganic routes. While infrastructure demand remains supportive, rising fuel and freight costs represent major headwinds, shifting company focuses toward cost mitigation and operational integration.

Key Risks to Watch

• Delay in integrating and turning around the newly acquired Jaypee cement plants.
• Further inflation in pet-coke, coal, and power costs affecting operating EBITDA.
• Subdued pricing power in key southern and eastern markets due to intense regional competition.

Recent Developments

On July 15, 2026, Andhra Pradesh Minister Nara Lokesh laid the foundation for Dalmia Bharat's ₹3,100-crore second green cement manufacturing unit in Kadapa. This facility is expected to be commissioned by the third quarter of FY28, becoming the company's largest integrated unit in South India with a clinker capacity of 6.1 MTPA and cement manufacturing capacity of 9.6 MTPA. Additionally, the company entered into a Business Transfer Agreement in May 2026 to acquire Jaiprakash Associates' cement assets for ₹2,850 crore.

Closing Insight

While Dalmia Bharat is successfully scaling its capacity footprint toward its long-term target, the near-term financials will continue to bear the weight of higher depreciation and integration costs. Long-term value creation depends entirely on execution speed and cost rationalization across new assets.

High Performance Trading with SAHI.