Detailed Narrative
Q1 FY26 Financial Performance Overview
Star Cement delivered a strong Q1 FY26, with total revenue reaching ₹847 crores, marking a 15.08% increase from ₹736 crores in the same period last year. EBITDA saw a significant surge of 94.91% to ₹230 crores, compared to ₹118 crores previously. Profit After Tax (PAT) more than tripled to ₹98 crores from ₹31 crores last year, representing a 216.13% growth. EBITDA per tonne also improved substantially by 74.26% to ₹1,774, up from ₹1,018 in Q1 FY25, driven by better realizations and cost management.
Volume Performance and Outlook
The company sold 1.222 million tonnes of cement and 0.074 million tonnes of clinker in Q1 FY26, totaling 1.296 million tonnes, an increase from 1.154 million tonnes last year. Cement sales in the Northeast region accounted for 8.97 lakh tonnes, up from 8.50 lakh tonnes, while sales outside Northeast were 3.25 lakh tonnes, compared to 3.04 lakh tonnes. Despite Q1 volumes being slightly impacted by early monsoon, management maintains its FY26 volume guidance of 5.4-5.5 million tonnes, expecting a pickup in subsequent quarters.
Capacity Expansion Plans and Timelines
Star Cement is actively pursuing significant capacity expansions. The Silchar unit (2 MTPA) is expected to be commissioned in January or February of FY26, with ₹105 crores already invested. The Jorhat grinding unit (2 MTPA) is slated for commissioning around January or February of FY27, with environmental clearance expected within 3-4 months. A major greenfield expansion in Rajasthan is planned, involving a 3-million-ton clinker plant and 4-million-ton grinding capacity, with an estimated CAPEX of ₹2,400-2,500 crores over approximately 3.5 years.
Cost Management and Green Initiatives
While variable costs, including power, fuel, and raw materials, saw a sequential increase in Q1 due to lower capacity utilization, management is focused on cost reduction. The company aims to increase its green energy share from the current 18% to 55-60%, with plans for a 40 MW solar project in Assam and exploration of wind options. A clear roadmap for this transition is expected within the next month, which is anticipated to significantly reduce variable costs in the long run.
Incentives and Subsidies
The company booked ₹62 crores in incentives during Q1 FY26, with an additional ₹150 crores in outstanding incentives expected to be received by the end of Q2 FY26. Management is confident in receiving these subsidies, which are crucial for cash flow. For the full FY26, the company expects to receive between ₹230-250 crores in incentives, maintaining a similar run rate to previous guidance.
Northeast Market Dynamics and Competition
The Northeast market is projected to grow at approximately 10%, with Star Cement currently holding a 27-28% market share of the 14 million-ton market. Management acknowledges increasing competitive intensity with new players like Ultratech and JK Lakshmi entering the region. While this might lead to some pricing pressure for a year or two, the company believes the market's growth will eventually absorb the new capacities, and the competitive landscape will stabilize.
New Business Segments: AAC Blocks
The AAC block plant, with a capacity of 20,000 CBM a month, has started operating at about 40% capacity. For the current financial year, the company expects to generate ₹70-80 crores in revenue from this segment. Management anticipates a 20-30% higher revenue contribution from AAC blocks in the next financial year as the plant ramps up to full potential, contributing to diversification and future EBITDA.