Star CementQ1 FY27
Star Cement Q1 FY27 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Price: ₹193P/E: 20.8Market Cap: ₹7.9K CrSector: Cement & Cement Products
Management growth scorecard
Revenue
Category 4
Margin
Category 3
Fundraise
Yes
Order
N/A
Capex
Yes
2 of 4 growth signals are positive.
Full analysisRevenue guidance
Category 4- →Full year volume growth guidance revised down from 11-12% to around 8-9% due to Q2 challenges, including Assam flooding. Growth expected to improve in Q3 and Q4.
- →Northeast sales expected to grow about 8-9% in FY27; industry growth forecast around 7%.
- →Clinker sales likely to be flat or slightly decline (5-10%) in FY27 due to increased clinker imports in Northeast.
- →Non-cement revenue target of INR 150 crores for the year remains intact with focus on expanding RMC plants and AAC division.
- →Long-term capacity addition planned with about 1 million tons clinker and grinding capacity addition expected over next 3 years by key players.
- →Expansion capex of ~INR 2,700-2,900 crores primarily focused on North India projects over next 2 years.
- →Post September 2026, EBITDA growth expected as GST subsidy impact normalizes.
Margin guidance
Category 3- →Earnings in Q1 FY27 were impacted by reduced subsidy and higher costs, with EBITDA of INR203 crores vs INR230 crores last year and PAT of INR74 crores vs INR98 crores.
- →From Q3 FY27 onwards, profitability is expected to improve as subsidy impact due to GST rate cuts stabilizes.
- →EBITDA hit of INR40 crores in Q1 due to GST reduction from 28% to 18% will not affect earnings beyond September FY27.
- →Volume growth for FY27 revised downward to 8-9% from earlier 11-12% estimate, with better growth expected in Q3-Q4.
- →Clinker sales may be flat or decline 5-10% in FY27 due to external clinker supply in Northeast.
- →Non-cement revenue targeted to reach INR150 crores annually by Q4 FY27.
- →Operational cost savings via logistics, introduction of EVs, wagon tipplers, and captive solar expected from Q3/Q4 FY27.
- →Overall, FY27 margins expected to recover and improve in H2, with growth resuming post subsidy adjustment impact.
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Fundraise plans
Yes- →Currently, Star Cement is focusing capex primarily on Rajasthan and North projects for the next 2 years.
- →The company aims to manage this capex with a debt-to-EBITDA ratio of about 1.5x to 1.6x.
- →There is no active plan for a Qualified Institutional Placement (QIP) as of now.
- →They will consider QIP or additional fundraising at an opportune time if opportunities arise requiring further funds, either organic or inorganic.
- →The management will monitor financial metrics before pursuing any equity fundraising.
Order book
The transcript provided does not mention any details regarding the current or expected order book or pending orders for Star Cement Limited. The discussion primarily focuses on:
- Production and sales volumes,
- Market demand and growth outlook,
- Capacity expansions and projects,
- Government incentives and policies,
- Pricing and cost dynamics, and
- Impact of external factors like floods and GST changes.
No specific information on order book or pending orders is shared in the call transcript.
Capex plans
Yes- →Star Cement plans significant capex primarily focused on Rajasthan and North India over the next 2 years, totaling around INR 2,600-2,900 crores (including GST).
- →Rajasthan project includes ~3 million tons grinding and ~3.3 million tons clinker capacity.
- →North project involves ~2 million tons grinding capacity in Jhajjar.
- →EC for North project expected by first week of October 2026; construction planned to start between mid-October to November 2026 with an 18-20 month timeline to completion (~Q1 FY29).
- →FY27 capex guidance is INR 500 crores for the ongoing projects; FY28 capex expected around INR 1,500 crores.
- →Considering potential grinding unit expansion in West Bengal depending on the new industrial policy; possible brownfield expansion in Siliguri with reduced capex and logistic improvements.
- →Additional investments planned in operational efficiency like railway siding in Silchar, EV introduction for transport, wagon tippler in Siliguri, and solar group captive contracts expected by Q3/Q4 FY27.
How does Star Cement rank vs peers in Cement & Cement Products?
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