Dalmia Bharat's performance in the second quarter of FY25 showed a significant decline. EBITDA fell 26% year-on-year to INR 4.3 billion, missing estimates by 5%. EBITDA per ton also dropped 32% year-on-year to INR 650, while operating profit margin contracted by 4.7 percentage points to 14%. Net profit after tax plummeted 54% year-on-year to INR 550 million, slightly below expectations.

Despite these challenges, the company reported an 8% year-on-year increase in volume growth, thanks to effective cost controls. Management attributed the weak performance to subdued cement demand in the first half of FY25, resulting in lower capacity utilization and pricing pressures. However, they anticipate a rebound in demand during the second half, driven by increased construction activities and government infrastructure projects, projecting an 8% year-on-year growth in demand for 2HFY25.

The stock has seen a correction of approximately 25% since December 2023, reflecting concerns over delayed capacity additions and pricing pressures in core markets. Dalmia Bharat remains one of the industry's lowest-cost producers, supported by a favorable blending ratio and lower freight costs. Currently trading at 10x/9x FY26E/FY27E EV/EBITDA, the stock is valued at a revised target price of INR 2,250, down from INR 2,390, with a "BUY" recommendation from Motilal Oswal.