Star Cement Ltd. share price target

We estimate Star to deliver consol EBITDA CAGR of 8% during FY19-22E (in-line consensus). We continue to like Star for its leadership positioning in the lucrative NE region, which drives its industry leading op margin and healthy return ratios. Further, its net cash position currently boosts its expansion capability. Thus, we value it at 10x EV/EBITDA (15% premium to its 5-yr mean), leading to TP of Rs 135 (10x Sep'21E EBITDA). We maintain BUY on the stock. We maintain BUY on Star Cement with a TP of Rs 135 (10x Sep21E consol EBITDA), implying EV of USD 176/MT.

We continue to like Star for its leadership positioning in the lucrative NE region, which will further enhance as Star ramps-up clinker capacity in NE region. Star's superior op margin should gain from increased local coal availability and cost reduction from upcoming WHRS. Star currently trades at a mere 7.1/7.1x FY21/22E EBITDA (EV of USD 125/MT). Maintain BUY with a revised TP of Rs 135. We maintain BUY on Star Cement with a TP of Rs 135 (10x Sep21E consol EBITDA), implying EV of USD 176/MT

For Q1FY20, Star Cement reported a weak set of numbers led by volume decline. Total revenues for the quarter registered 9.7% YoY decline to | 468 crore (vs. I-direct estimate of | 509 crore). Volumes during the quarter stood at 0.73 MT (vs. I-direct estimates of 0.8 MT), down 9.5% YoY due to lower clinker sales. Realisations remained flat YoY at | 6,414/t (broadly in line with I-direct estimates of | 6,477/t). Production costs also remained stable YoY leading to stable EBITDA/t of | 1,637/t. However, EBITDA declined 9.5% YoY to | 119 crore (vs. I-direct estimate of | 124 crore), due to lower volumes....

Star Cement with double digit growth to outpace industry Backed by various infrastructure projects and low cost housing scheme, NER is expected to grow ~8-9% in coming years. Out of total installed capacity of ~ 11 MT in the region, Star Cement is one of the dominant players with a capacity of 3.7 MT. Out of the total installed capacity in the region, the top three players namely Star Cement (3.7 MT), Dalmia Cement (2.5 MT) and TopCem (1 MT), control ~ 65% of capacity. Most players in the region except for Star Cement and Dalmia, operate at high capacity...

Star Cement's Q3FY19 results were a mixed bag. While revenues remained below our estimates, EBITDA and PAT were higher than our estimates due to better margins Revenues during Q3FY19 grew 11.5% YoY to | 417.5 crore (below Idirect estimate of ~ | 459 crore). Sales volumes grew 5.6% YoY to 0.66 MT remaining below our estimates due to lower sales outside NER regions. Realisations grew 5.5% YoY to | 6374/t EBITDA margins remained better than our estimates at 29.5% (above I-direct estimate of 25.9%) in Q3FY19. However, it declined 836 bps...

ICICI Securities Ltd | Retail Equity Research Star Cement reported a mixed set of Q2FY19 numbers. While revenues and PAT were above our estimates, EBITDA was below our estimate. PAT was higher due to lower interest & tax expenses Revenues increased 28.7% YoY to | 362.9 crore (above I-direct estimate of | 342.5 crore) mainly led by volume growth of 27% YoY to 0.56 MT (in line with I-direct estimate: 0.55 MT) as last year volumes got impacted due to floods in the NER region...

Star Cement today announced receipt of Rs252mn of cash from the Central Government towards the freight subsidy backlog (under the NEIIPP scheme). The subsidy backlog clearance has accelerated over the past 12 months which has considerably reduced the outstanding on Star's books thus strengthening its balance sheet. We remain positive on the company owning to strong demand and pricing outlook for the North-East region, which should sustain its superior profitability. We reiterate BUY with a TP of Rs162. Acceleration in receipt of subsidy cash over the past 12 months: Star Cement...

Strong growth in core markets; Maintain BUY Star Cement's Q1FY19 consolidated EBITDA moderated 17% YoY, owing to expiration of freight subsidy and higher fuel costs, despite better pricing. Star's reported unitary EBITDA of Rs1634/MT, is still the best in the industry. Strong demand and pricing in the NE region should help Star Cement to sustain its industry leading profitability despite expiration of its freight subsidy. Robust earnings along with faster clearance of subsidy backlog by central government should accelerate free cashflow generation and should support Star's 20%+ RoE/RoCE. We reiterate BUY with a revised TP of Rs162....