Goldman Sachs upgraded Dalmia Bharat Ltd. from a 'neutral' to 'buy' rating on Thursday, June 25, while revising its price target to ₹2,020 per share from ₹2,090 earlier. According to reports from CNBC TV18, this revision indicates an upside potential of nearly 17% from the previous closing price. The stock gained nearly 2% on Thursday, opening at ₹1,742.10 and touching an intraday high of ₹1,765 before settling around ₹1,728.05, as reported by LiveMint.
Goldman Sachs highlighted key factors that have contributed to the cement sector's underperformance over the last three months, as reported by CNBC TV18. These include expectations of high energy costs driven by the West Asia crisis compounded by rupee depreciation, weakening demand outlook due to lower potential government spending, and continued capacity additions in the sector driving concerns about limited price increases. However, the brokerage noted that the first factor has been addressed with the resolution of the US-Iran war and subsequent fall in oil prices, leading to a strengthening currency against the US Dollar. According to LiveMint, Goldman Sachs believes these concerns have largely eased following the de-escalation of the US-Iran conflict, which has led to a sharp correction in crude oil prices and supported the rupee against the US dollar.
Despite addressing previous concerns, Goldman Sachs identified a new risk factor - a potentially sub-par monsoon season that could negatively impact construction demand in rural India. According to the brokerage's analysis reported by CNBC TV18, while these factors have been addressed and factored in only partly in Dalmia Bharat's stock price, the company is positioned for the highest growth among its peers. The brokerage called Dalmia Bharat a tactical play based on these expectations, as reported by LiveMint. Despite these risks, Goldman Sachs described Dalmia Bharat as a tactical play within the cement sector, expecting the company to deliver the highest growth among its peers and believing the stock is currently trading at attractive valuations relative to the broader industry.
From a technical perspective, Dalmia Bharat opened with a gap-up on Thursday following Wednesday's strong close, though the stock gave up early gains and traded largely flat during the session, as noted by Angel One's Rajesh Bhosale. However, the bullish engulfing candle formation on Wednesday is a positive technical signal, with the stock likely to remain in uptrend as long as it holds above the ₹1,670 level. The Relative Strength Index (RSI) has crossed recent swing highs, indicating strengthening momentum and supporting the possibility of continued upward movement. On the upside, the 50-day exponential moving average near ₹1,820 serves as immediate resistance, followed by the 89-day DEMA around ₹1,860, according to Angel One analysis.
At current levels, Dalmia Bharat shares are trading at a one-year forward Enterprise Value/EBITDA multiple of 10.4 times its estimated earnings for financial year 2027 and 9.07 times for financial year 2028, as reported by CNBC TV18. In comparison, the largest player UltraTech is trading at 18.6 times financial year 2027 and 15.5 times financial year 2028 EV/EBITDA. Among 40 analysts covering the stock, 27 have a 'buy' rating, eight have a 'hold' rating, and five have a 'sell' rating. Goldman Sachs continues to prefer UltraTech Cement with a 'buy' recommendation and price target of ₹13,160 per share.
