Any current/future new fundraising through debt or equity?

Star Cement plans to raise debt of around INR400 to INR500 crores to fund ongoing capex, starting from Q3 FY24, spread over Q3 and Q4. The debt rate is expected to be competitive, likely between 8% and 8.1%, due to the company’s healthy leverage ratios. Peak net debt is expected to be around INR500 crores, with the company targeting to repay and achieve near zero debt by end of FY25. No mention of any current or planned equity fundraising in the transcript. The debt plan is primarily to complete the clinker plant and grinding unit expansions scheduled through FY24 and FY25.

Any current/future capex/capital investment/strategic investment?

Setting up a 25 MW solar plant for grinding units in Guwahati with an investment of INR 80-90 crores, expecting 100% SGST benefit. Target commissioning is around March next year, may delay by 1-2 months. Total capex for expansion around INR 2,100-2,300 crores across: - Clinker plant: INR ~1,300 crores (3.3 million ton capacity) - Guwahati grinding unit: INR 400-420 crores (2 million ton capacity) - Silchar grinding unit: INR ~450 crores (2 million ton capacity), land acquisition 75% done, commissioning expected by December 2024, with 3-4 months delay. Maintenance capex about INR 80-90 cr

Future growth expectations in sales/revenue/volumes?

Star Cement expects full-year volume growth of around 12%-13%, maintaining previous guidance, with the first quarter performing better than last year. Growth in the second quarter might be softer due to late monsoon onset and maintenance activities, but still expected to be in double digits. Northeast volumes have already grown around 30%, while East region volumes are flat. Expansion projects will add capacity, with new grinding units in Guwahati (Nov-Dec 2023), clinker plant in Meghalaya (Jan-Feb 2024), and Silchar plant (Dec 2024). These expansions will support volume growth by increasing g

Future growth expectations in earnings/operating earnings/profits/EPS?

Star Cement expects healthy margins despite the removal of previous subsidies, indicating stable profitability. Volume growth guidance remains at 12-13% for the full year, with potential double-digit growth continuing. Expansion projects (clinker plant and grinding units) are underway with capex of approx. INR2,100-2,300 crores, expected to boost capacity and sales from FY '24 to FY '25. Debt is planned around INR400-500 crores for capex, with an aim for near zero net debt by end of FY '25, supporting financial health. SGST benefits on solar plant investment (INR80-90 crores) will provide tax

Star CementQ1 FY24Cement & Cement Products

Star Cement Q1 FY24 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹182P/E: 20.0Market Cap: ₹7.5K CrSector: Cement & Cement Products

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

Yes

Order

N/A

Capex

Yes

2 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 3

Star Cement expects full-year volume growth of around 12%-13%, maintaining previous guidance, with the first quarter performing better than last year.
Growth in the second quarter might be softer due to late monsoon onset and maintenance activities, but still expected to be in double digits.
Northeast volumes have already grown around 30%, while East region volumes are flat.
Expansion projects will add capacity, with new grinding units in Guwahati (Nov-Dec 2023), clinker plant in Meghalaya (Jan-Feb 2024), and Silchar plant (Dec 2024).
These expansions will support volume growth by increasing grinding and clinker capacity.
Target to increase premium product share from current 4% to double digits over the next 2 quarters, which should positively impact revenue.
Focus remains on consolidating and increasing market share in Northeast with stable pricing expected in the near term.

Margin guidance

Category 3

Star Cement expects healthy margins despite the removal of previous subsidies, indicating stable profitability.
Volume growth guidance remains at 12-13% for the full year, with potential double-digit growth continuing.
Expansion projects (clinker plant and grinding units) are underway with capex of approx. INR2,100-2,300 crores, expected to boost capacity and sales from FY '24 to FY '25.
Debt is planned around INR400-500 crores for capex, with an aim for near zero net debt by end of FY '25, supporting financial health.
SGST benefits on solar plant investment (INR80-90 crores) will provide tax advantages, enhancing earnings.
Management is optimistic about stable pricing in Northeast and East markets, bolstering future revenue.
Focus on increasing premium product share from 4% towards double digits in upcoming quarters may improve margins.
Operational efficiencies and cost controls (consultancy support) aim to keep expenses stable, supporting profitability.

See what Star Cement management said on margin guidance — free account, 30 seconds.

Fundraise plans

Yes

Star Cement plans to raise debt of around INR400 to INR500 crores to fund ongoing capex, starting from Q3 FY24, spread over Q3 and Q4.
The debt rate is expected to be competitive, likely between 8% and 8.1%, due to the company’s healthy leverage ratios.
Peak net debt is expected to be around INR500 crores, with the company targeting to repay and achieve near zero debt by end of FY25.
No mention of any current or planned equity fundraising in the transcript.
The debt plan is primarily to complete the clinker plant and grinding unit expansions scheduled through FY24 and FY25.

Order book

- The transcript does not explicitly mention the current or expected order book or pending orders for Star Cement Limited. - However, it is noted that the demand in the Northeast region is good, with several new projects, especially hydropower projects, emerging which are significant cement consumers. - Star Cement is currently focused more on the trade segment but acknowledges opportunities to expand into the nontrade segment linked to these projects. - The company mentions that local players are servicing these nontrade projects, and outside players also enter this segment occasionally. - Management emphasizes consolidating market share in Northeast and East, especially with upcoming capacity expansions, which positions them well to meet growing market demand. No precise figures on order book or pending orders are provided in the transcript.

See what Star Cement management said on order book — free account, 30 seconds.

Capex plans

Yes

Setting up a 25 MW solar plant for grinding units in Guwahati with an investment of INR 80-90 crores, expecting 100% SGST benefit. Target commissioning is around March next year, may delay by 1-2 months.
Total capex for expansion around INR 2,100-2,300 crores across:
- Clinker plant: INR ~1,300 crores (3.3 million ton capacity)
- Guwahati grinding unit: INR 400-420 crores (2 million ton capacity)
- Silchar grinding unit: INR ~450 crores (2 million ton capacity), land acquisition 75% done, commissioning expected by December 2024, with 3-4 months delay.
Maintenance capex about INR 80-90 crores annually.
Debt of INR 400-500 crores expected in 3rd-4th quarter FY23-24 for capex, at competitive interest rates (~8%-8.1%).
Additional smaller investments include AAC block project and cost reduction initiatives like BTAP wagons for fly ash logistics.

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Star Cement Q1 FY24 Earnings Call Analysis

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