Star Cement Ltd. share price target

We interacted with Tushar Bhajanka, Deputy MD of Star Cement, to understand the company’s growth plans and the demand-supply outlook in the Northeast.

Superior profitability to sustain, led by focus on operating efficiencies: During Q1FY26, company's profitability improved sharply on YoY basis (EBITDA/ton stood at Rs 1761/ton, +75% YoY), led by better volume growth, improvement in realisations and lower RM cost. We believe that company's EBITDA/ton to remain strong going forward, led by continuous focus on operational efficiencies (led by increase in share of renewable power, WHRS and captive coal, freight cost optimisation through addition of grinding units in NE and Rajasthan), incentives from state government & positive operating...

We maintain our BUY rating on the stock.

We recommend a BUY rating on the stock with a TP of Rs 237/share, implying an upside potential of 10% from the CMP.

We assume coverage on Star Cement (Star) with BUY and target price of Rs250, while valuing the stock at FY27E EV/EBITDA of 12x. Star, with the upcoming commissioning of grinding units (GUs) in Silchar and Jorhat (both in Assam) is set to consolidate its leadership position in the Northeast.

The Meghalaya clinker-unit stabilisation along with the better demand-pricing environment in its operating region (East/North east) aided Star’s overall performance.

Revenues rose ~15% YoY in Q4FY25 on the back of ~9% volume gains, though realisations stayed flat (-1% YoY)

As market leader, Star Cement’s Q3 volume growth outstripped northeastern demand growth, but its operational performance was hit by the delayed Meghalaya clinker stabilisation, higher maintenance shutdown cost, higher freight on a highway being constructed, etc.

Revenues rose ~10%/12% YoY/QoQ in Q3FY25 backed by volume gains though realisations stayed flat

We maintain our BUY rating on the stocks.

Timely capacity expansion (new 4mnt grinding unit by FY27) to help volume growth ahead of industry tapping buoyancy in north-east region

We maintain our BUY rating on the stocks.

Revenue rose 10% backed by healthy 9% volume gains and realisations remained flat YoY/QoQ at Rs 6,560/t with improved regional mix

We maintain our BUY rating on the stock with a TP of Rs 250/share, implying an upside potential of 20% from the CMP.

Star Cement’s (Star) Q1FY25 performance appears to be in the slow lane owing to muted volumes (flat YoY) and ‘one-off’ cost impact (external purchase of clinker).

We change our recommendation from HOLD to BUY as we see the recent correction in stock price as a good entry point.

Steady 11% growth in a challenging quarter assisted by 12% YoY volume increase; realisations softens

We change our recommendation from BUY to HOLD as recent appreciation in the stock price leaves us with little upside.

STRCEM reported a mixed set of numbers, EBITDA and blended realisation in line with our estimate, while revenue and volume are marginally ahead of our estimate. Revenue up by 10.1% YoY (+40.2% QoQ) to Rs9.13bn, mainly led by 13.8% YoY (+43.7% QoQ) increase in volume of 1.41mt (1.387mt cement + 0.024mt clinker) sales.