Deccan Cements, the Hyderabad-based cement maker, is like that cousin who spends all his salary on a Royal Enfield but still borrows bus fare. With just 1.8 MTPA capacity, ₹505 Cr annual sales, and a mega capex plan of ₹1,120 Cr, the company is betting big while running on wafer-thin ROE of 1%. Cement is 99% of revenues, power is just a side hustle. Investors are left wondering — will this expansion be a Shree Cement-style compounding story or another cement bag dumped in a godown?
2. Introduction
Founded in 1979, Deccan Cements started as a small regional player. Fast forward four decades, it still behaves like the “also ran” of the cement industry — not quite UltraTech, not quite Ambuja, but somewhere in the cement dust.
The cement sector itself is a funny beast: when demand booms, everyone raises capacity; when demand falls, everyone still raises capacity (because sunk costs). Prices swing like Sensex on Budget Day, and margins depend more on fuel and freight costs than marketing genius.
Deccan sells OPC, PPC, PSC, and even specialty cements like sulphate-resistant and oil well cement. Good for their product brochure, but 99% of sales still come from plain vanilla cement. Add in two small renewable plants and a 7 MW waste heat recovery unit, and you can say they are “green”… but only in the PowerPoint presentation.
The big bet: doubling capacity to 3.6 MTPA by FY25-end with a debt-funded capex. Will this move transform Deccan from a dusty regional player into a serious midcap cement stock? Or will it just leave them with a huge loan and bigger depreciation bills?
3. Business Model – WTF Do They Even Do?
Deccan Cements does the obvious: manufacture cement, sell it to dealers, and pray for infra spending by the government. Their network has 1,000+ dealers across South and Central India. Sales volumes are steady at ~1.8 MTPA, hardly growing.
Products:
OPC (33/43/53 grade) – the plain idli of cement.
PPC – used in dams, dykes, sewage pipes, and apparently political promises.
PSC – good for coastal and civil projects.
Specialty Cement – sulphate resistant, rapid hardening, oil well cement. Niche, but mostly PR.
99% of revenue is from cement, 1% from power (mini hydel, wind, WHRS). If cement is biryani, power is just the onion raita on the side.
4. Financials Overview
Metric
Latest Qtr (Jun’25)
YoY Qtr (Jun’24)
Prev Qtr (Mar’25)
YoY %
QoQ %
Revenue (₹ Cr)
151
172
119
-12.5%
26.9%
EBITDA (₹ Cr)
28
11
13
154%
115%
PAT (₹ Cr)
15.4
2.8
8
446%
92%
EPS (₹)
10.9
2.0
5.7
446%
92%
Commentary: Revenues are falling, but PAT jumped thanks to margin recovery. Annualised EPS = ₹44 → P/E ~23 if sustained. But TTM EPS = ₹14 → current P/E = 71. Basically, depends on whether they repeat Jun’25 or Dec’24.
5. Valuation – Fair Value Range Only
Method 1: P/E Multiple
EPS (annualised Jun’25) = ₹44
Assign mid-cap cement P/E = 15–20x
Fair value = ₹660 – ₹880
Method 2: EV/EBITDA
EV = ₹1,994 Cr, EBITDA (TTM) = ₹68 Cr
EV/EBITDA = 29x vs peers 12–15x
Fair value = ₹400 – ₹750
Method 3: DCF
Assume post-expansion capacity doubles, EBITDA margin ~20%, discount at 12%.
