Target: ₹270
CMP: ₹203
As market leader, Star Cement’s Q3 volume growth outstripped north-eastern demand growth, but its operational performance was hit by the delayed Meghalaya clinker stabilisation, higher maintenance shut-down cost, higher freight expenses amid ongoing highway construction, etc.
With a 26 per cent market share in the northeast, sales volumes grew 9.7 per cent y-o-y to 1.07 mt (NE up about 13 per cent, outside NE down about 3 per cent) and revenue 10.3 per cent y-o-y to ₹700 crore. While fuel cost was lower, the operating performance was hit by a one-time ₹40 crore expense and higher freight costs.
While the Meghalaya clinker unit was stabilised by the end of November, the 2 mt Silchar GU is expected to commence by December 2025, and the 2 mt Jorhat GU by the end of FY27, taking overall cement capacity to 11.7 mt. Further, a geological survey and land acquisition are ongoing for the recently acquired 65 mt limestone reserves at Nimbol, Rajasthan, where a clinker plant will be set up. The AAC block unit is expected to begin by Q4.
Greater operational efficiency with the stabilised clinker unit, incentives from capacity commissioning, and a rising share of green energy would boost operating performance. While UltraTech is acquiring a non-controlling minority stake (8.69 per cent), the company has not guided for further promoter stake dilution.
Risks: Rising operational costs, demand slowdown.