'It is a...' - What Equirus says on Dalmia Bharat acquiring JP Associates cement biz from Adani

Dalmia Cement (Bharat), a wholly owned subsidiary of Dalmia Bharat Ltd, has signed a business transfer agreement to acquire cement assets previously held by Jaiprakash Associates Ltd (JAL), whose assets were recently acquired by the Adani Group under the Insolvency and Bankruptcy Code framework.

The agreement, executed on 21 May 2026, covers plants at Rewa in Madhya Pradesh and Churk, Chunar and Sadwa in Uttar Pradesh at an enterprise value of Rs 2,850 crore. The portfolio includes cement capacity of 5.2 MTPA, clinker capacity of 3.3 MTPA, 99 MW of thermal power capacity, dedicated railway sidings at Rewa and Chunar, and a common railway siding at Churk.

Equirus Securities believes that it is a good acquisition, beneficial for company it gets access to newer markets at reasonable valuations.  Dalmia already has 3 limestone mines near to 10 to 20 kms proximity to Rewa plant with estimated life of 8 to 10 years for existing lime stone reserves on 80 per cent clinker utilisation, the brokerage said.

"We believe life of Kiln will not be an issue as Kilns can be used for many decades, if maintained well. With refractory replacements and replacement of part of kiln shell kilns have an undefined life. Orient Cements kilns have been operating since 1982. Challenge comes with efficiency of old kilns in terms of heat and power consumption as newer kilns get better designed and are more efficient. But it doesn't make the old kilns useless," it noted.

Dalmia Bharat’s total cement capacity will rise to 54.7 MTPA. With expansion projects under way in Belgaum, Pune and Kadapa, total capacity is expected to reach 66.7 MnTPA by the second or third quarter of FY2028. It said it expects to complete the transaction within two weeks, adding that proximity to captive mines and its cost leadership should support ebitda and returns.

Dalmia Cement had earlier signed a framework agreement with Jaiprakash Associates in December 2022 for the sale of business assets and related agreements, but the transaction fell through after JAL was admitted to insolvency. The present acquisition is also intended to settle long-running disputes between DCBL and JAL, including issues linked to a long-term clinker supply agreement and pending arbitral awards.

"Dalmia earlier has successfully revived Murli plant in Maharashtra which was in much worse condition compared to JP assets. We believe other two grinding units (Chunar, Churk) and one Blending unit (Sadwa) will source clinker from Rewa plant With this transaction will mark its presence in Central region. Dalmia is eight player entering the region," said Equirus.

"Dalmia Bharat is likely to complete this acquisition in 2 weeks with mix of Debt and Internal accruals and expects commercial production from 2QFY27. We believe CCI clearance to not be an issue as earlier Dalmia was granted approval for same," it adds.

Ambit has a 'buy' rating on Dalmia Bharat with a target price of Rs 2,150, while HDFC Securities also gave it the same rating with a target price of Rs 2,200. Axis Direct has also given it a 'buy' with a target price of Rs 2,430. BoB Capital Markets has a 'hold' rating with a target price of Rs 2,110 However, Elara Capital has a 'reduce' tag for the counter with a target price of Rs 2,020.