Star Cement LtdQ1 FY26

Star Cement Ltd

Q1 FY26 Earnings Call Analysis

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 a volume growth of 10% to 12% in FY27 compared to FY26 volumes (~5.3 million tons).
→For FY26, they achieved the upper end of guidance with 5.5 million tons.
→Revenue increased from INR3,163 crores in FY25 to INR3,776 crores in FY26.
→EBITDA per ton for FY26 was INR1,738, up from INR1,245 in FY25, indicating improved profitability.
→New plants under development (Rajasthan, Bihar, Umrangso, Jorhat) will add significant capacity from FY29 onwards, supporting volume growth.
→Management targets ramp-up to 80-90% capacity utilization in new plants over 3.5 to 4 years.
→Initially, new plants may impact EBITDA per ton, but long term blended EBITDA per ton is expected around INR1,300-1,400 with volume growth driving absolute EBITDA.
→Trade market penetration and premium cement share will be maintained to safeguard profitability.

Margin guidance

Category 3

→Star Cement aims for a 10% to 12% cement volume growth in FY27 over 5.3 million tons in FY26.
→EBITDA per ton expected to remain between INR 1,500 to INR 1,700 in the Northeast segment for next 2-3 years.
→With Rajasthan project commissioning, blended EBITDA per ton likely to be INR 1,300 to INR 1,400 in the long term.
→Full-year subsidy income expected to reduce to INR 140-150 crores in FY27 from INR 184 crores in FY26, impacting profits.
→Capex guidance revised to INR 600-700 crores in FY27 and INR 1,500 crores in FY28, supporting volume and capacity growth.
→New grinding units in Bihar and Haryana and clinker plants in Rajasthan and Umrangso to expand capacity and revenues.
→The company targets a breakeven of new plants within 3.5 to 4 years with pricing strategies and capacity utilization uplift.
→EPS and absolute profits expected to increase with expanded volumes and geographical presence.

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Fundraise plans

Yes

→Star Cement has taken Board approval to raise funds via QIP (Qualified Institutional Placement), but no final decision or timing has been fixed yet.
→The company plans to consider QIP once the net debt to EBITDA ratio reaches around 1.5x.
→The market condition is currently weak, so no immediate QIP plans; they will inform in advance before proceeding.
→Capex funding for upcoming projects (Rajasthan, Bihar, Umrangso) is underway, with estimated capex of INR600-700 crores in FY27 and INR1500 crores in FY28, likely requiring financing.
→No explicit mention of new debt issuance currently, but ongoing large capex indicates potential future debt or equity needs.

Order book

The transcript provided from Star Cement Limited's conference call does not mention any details regarding their current or expected order book or pending orders. The discussion focuses primarily on: - Volume growth and capacity expansion plans. - Pricing trends and market competition. - Capex timelines and locations (Rajasthan, Bihar, Jorhat, Umrangso, Haryana). - Fuel cost impacts and green energy share. - Financial performance including revenue, EBITDA, and profit. - Trade market penetration and premium product share. No specific information about order book size, value, or pending orders is disclosed in the available transcript.

Capex plans

Yes

→Capex for Rajasthan unit (3.3 million tons clinker plant + 2-2.5 million tons grinding, plus Haryana grinding 2-2.5 million tons) is around INR 2,400-2,500 crores with 10% variation; target start by 1H FY29 (Sep 2028 approx).
→Bihar grinding unit planned with clinker sourced from Meghalaya plant; timeline roughly 2 years, includes land acquisition.
→Approval and land acquisition for grinding units in Nimbol (Haryana) and Bihar expected by Oct 2026.
→FY27 capex estimated at INR 600-700 crores.
→FY28 capex estimate increased to INR 1,500 crores.
→Group captive power agreement in progress to boost green energy share.
→QIP (Qualified Institutional Placement) planned once net debt/EBITDA reaches 1.5x; no firm timeline yet.
→Overall strategy involves optimizing capacity utilization with branding and dense distribution, aiming for breakeven in 3.5-4 years for new units.

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