Star Cement — Q3 FY26 earnings call

Call held 9 Feb 2026

Management summary

Star Cement delivered strong financial performance in Q3 FY26, driven by robust revenue and EBITDA growth, and significant improvement in EBITDA/ton. The company outlined ambitious capacity expansion plans totaling 4,800 crores across new regions, while managing a decline in incentive income due to GST changes and a temporary rise in freight costs. Management expressed confidence in maintaining profitability and brand-led market entry strategies.

Highlights

  • Total Revenue for Q3 FY26 reached 880 crores, marking a 22.4% year-on-year growth from 719 crores.

  • EBITDA (excluding exceptional items) for Q3 FY26 significantly increased to 207 crores, a 93.5% rise from 107 crores in the previous year.

  • EBITDA per ton for Q3 FY26 improved to 1,600 Rs, a 60% increase compared to 1,000 Rs in the same quarter last year.

  • Profit after tax (PAT) for the nine months ended December 2025 surged to 243 crores, a substantial 428.3% increase from 46 crores in the prior year.

  • Premium cement sales constituted 17.1% of trade sales in Q3 FY26, up from 12% last year, indicating a shift towards higher-value products.

Concerns

  • Incentive income for Q3 FY26 dropped to 33 crores, a 28% year-on-year decline, attributed to the reduction in GST from 28% to 18%.

  • Freight costs increased in Q3 FY26 due to a one-off strike in Meghalaya in October, which necessitated the use of more expensive rake transport, though management expects normalization in Q4.

  • A one-off political donation of 5 crores was recorded in Q3 FY26, impacting costs.

Key financials

2 periods

Q3 FY26

  • Revenue
    ₹880 Cr
    YoY +22.4%
  • EBITDA
    ₹207 Cr
    YoY +93.5%
  • EBITDA/ton
    ₹1,600
    YoY +60%
  • Cement Sales Volume
    12.31 lakh tons
    YoY +16%
  • Non-Cement Revenue
    ₹13 Cr

9M FY26

  • PAT
    ₹243 Cr
    YoY +428.3%

What they filed

Q1 FY27: revenue up 3.4%, net profit down 24.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue642 719 1,052 912 811 +26%880 +22%1,174 +12%943 +3%
EBITDA96 104 263 228 190 +98%202 +94%315 +20%194 −15%
Net profit6 9 123 98 71 +1083%74 +722%147 +20%74 −24%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Capex ₹150 Cr
    • Overall CAPEX for four projects (Rajasthan, Haryana, Bihar, Umrangso) ₹4,800 Cr
    • Nimbol (Rajasthan) 3 MT clinker + 3 MT grinding and Haryana 2 MT grinding ₹2,400 Cr
    So, the overall CAPEX for these four projects is about 4,800 crores. ... I think the cost that we have and that may change and I think the broad cost that we have taken out is about 2,400 to 2,500 for the clinker plant and the integrated grinding unit along with the grinding unit in Haryana.
  • Debt 1.5× EBITDA
    So, ideally we'd want to keep our debt to EBITDA ratio to be less than 1.5X EBITDA

Guidance & targets

Volume

  • Total Volume Volume · FY26 · Medium confidence ~5.3 million tons

    Previously 5.4 million tons → ~5.3 million tons

    No, we don't. So, I think we will be trying to do about that or probably 5.3. So, I don't think there is any upward revision on that guidance for Quarter 4. I think we will be broadly growing at about the same pace in Quarter 4 as well.

    — Management

  • Total Volume Growth Volume · Q4 FY26 · Medium confidence 10-12% YOY
    But what I can say about Q4 is that this year we will see a 10% to 12% growth in Q4 as well

    — Management

  • Cement Volume Growth Volume · Q4 FY26 · Medium confidence 8-10% YOY
    in terms of cement volumes the cement volume will be coming out about 8% to 10% in Q4 as well

    — Management

  • Volume Growth Volume · FY27 · Medium confidence Similar to FY26
    In the coming year I think the volume growth would be similar to the volume growth that we experienced in FY26

    — Management

Profitability

  • Non-Cement Business EBITDA Margin Profitability · Next year (FY27) · Medium confidence 20%
    next year we are hopeful that 20% EBITDA margin should be minimum there from that business.

    — Management

  • East Region EBITDA/ton Profitability · Current · Medium confidence Rs. 600-700 (can reach Rs. 800 with price betterment)
    I think the EBITDA per ton that we earn in East is about Rs. 600 to 700 and I think with some price betterment I think it can reach to about Rs. 800.

    — Management

  • Rajasthan EBITDA/ton Profitability · Steady state · Medium confidence > Rs. 1,000
    I think our modelling in the steady state expects it to be more than 1,000

    — Management

  • Star Cement Overall EBITDA/ton Profitability · Future · Medium confidence Rs. 1,300-1,400

    Previously Rs. 1,300-1,500 → Rs. 1,300-1,400

    I think going in the future I think we do expect like 1,300 to 1,400 to be the range for Star Cement.

    — Management

  • North Region EBITDA/ton Profitability · Future · Medium confidence Rs. 1,000-1,100
    if you are saying North is Rs. Rs. 1000 to Rs. 1,100 EBITDA per ton

    — Management

Revenue

  • Non-Cement Revenue Revenue · FY26 · Medium confidence ~45 crores
    Till now it is around 25 crores, we are expecting to be around 45 crores this year

    — Management

  • Non-Cement Revenue Revenue · Next year (FY27) · Medium confidence ~100 crores
    next year we expect about 100 crores coming from this business.

    — Management

  • AAC Block Revenue (Full Utilization) Revenue · Full utilization · Medium confidence 90-100 crores
    We can generate a revenue of about 90 to 100 crores if we utilize it fully.

    — Management

Capex

  • Total CAPEX for 4 projects (Rajasthan, Haryana, Bihar, Umrangso) Capex · Next 3-4 years · High confidence 4,800 crores
    So, the overall CAPEX for these four projects is about 4,800 crores.

    — Management

  • Capital Subsidy as % of CAPEX (Rajasthan) Capex · Rajasthan project · High confidence ~23%
    That we are happy, it is about 23% of the CAPEX as a capital subsidy.

    — Management

Capacity

  • Rajasthan Plant Commissioning Capacity · Before FY29/FY30 · Medium confidence Sooner than Umrangso
    the Nimbol Rajasthan plant will start sooner than the Umrangso plant.

    — Management

  • Umrangso Plant Commissioning Capacity · FY29 · Medium confidence Around FY29
    and probably Umrangso may commission about FY29.

    — Management

  • All New Plants Commissioning Capacity · 2H FY29 or beginning of FY30 · Medium confidence 2H FY29 or beginning of FY30
    I think towards the second half of FY29 or beginning of FY30, these all plants should be commissioning.

    — Management

Debt

  • Debt to EBITDA Ratio Debt · Ongoing · High confidence < 1.5x
    So, ideally we'd want to keep our debt to EBITDA ratio to be less than 1.5X EBITDA

    — Management

What to watch in Q4 FY26

FY27 CAPEX Plan

Next quarter
Current 150 crores (Q4 FY26 plan), 431 crores (9M FY26 incurred)
Target Detailed FY27 CAPEX plan

Why it matters

The detailed FY27 CAPEX plan is crucial for understanding the funding and execution of the ambitious 4,800 crores expansion program.

FY27, we will have to probably plan it a bit and get back because we are still figuring out our plans in Rajasthan so, accordingly we will have to revise the numbers and probably get back to you on that

Risks & concerns

  • Competitive pricing pressure in new Northern markets due to new capacity additions.

    medium

    Management believes their brand-building approach will allow them to maintain margins rather than engaging in price wars, despite new entrants.

    Analyst acknowledged

  • Volatility in freight costs due to external events like strikes.

    low

    A strike in Meghalaya in Oct/Nov led to increased logistics costs due to reliance on rakes, but management clarified it was a one-off event not expected to recur in Q4.

    Analyst acknowledged

Q&A highlights

8 direct
Impact of Meghalaya coal mining blast on operations. Direct
We have no relation to that incident because our coal is not coming from Meghalaya. It's unfortunate, but we have no information about it.

Clarifies that the company's coal sourcing is diversified and not impacted by regional illegal mining issues.

Asked by Harsh Mittal

Upward revision of FY26 volume guidance (5.4 MT) given strong Q3 growth. Direct
No, we don't. So, I think we will be trying to do about that or probably 5.3. So, I don't think there is any upward revision on that guidance for Quarter 4. I think we will be broadly growing at about the same pace in Quarter 4 as well.

Provides clarity on volume expectations for the full year and the upcoming quarter, indicating no significant upside revision despite Q3 performance.

Asked by Harsh Mittal

Reason for 13% YoY and 6% sequential increase in freight costs. Direct
Actually, in October, we had a strike. The strike had lasted. It was a strike in Meghalaya which restricted the movement of clinker. So, we had to use rakes to send clinker to a vending unit. That had increased our logistics cost. And that is why you see abnormal hike in our logistics cost compared to last quarter or YOY which I don't think you will see from Q4 when you compare Q4 to last year's quarter.

Explains the temporary nature of the freight cost increase, attributing it to a one-off event (strike) rather than a structural issue, and expects normalization.

Asked by Harsh Mittal

Impact of GST reduction from 28% to 18% on incentive income and future subsidy run rate from Silchar. Direct
I think the run rate for the subsidy that we experienced in Q3 is the result of the reduction in GST from 28% to 18%, which of course then reduces the overall subsidy amount which we were getting. So, that's why there's a drop. And the question regarding Silchar, when Silchar gets commissioned, first it will use the input GST from the project. So, that will take at least 7-8 months to fully utilise. And after we utilise the GST input credit, that's when we will start utilising the subsidy. So, we can see the benefit of having Silchar from Quarter 4 onwards next year in terms of subsidy.

Clarifies the reason for the decline in incentive income and provides a timeline for when Silchar's commissioning will start contributing to subsidy benefits.

Asked by Navin Sahadeo

How Star Cement achieved a 2% increase in realization in a tough Eastern region market. Direct
I mean the information that I have for Bihar and West Bengal, the YOY, the prices in Bihar have risen a bit for us, but the prices in West Bengal have fallen. So, that is the observation. So, for us outside Northeast, which is basically Bengal and Bihar, has been quite neutral YOY, from FY26 Q3 compared to last year Q3. And in Northeast, we have seen an increase in the price of about Rs. 20 compared to last year same quarter. So, I think our weighted average realisation has improved mainly because of Northeast, in East, we have been broadly neutral.

Explains the regional dynamics contributing to overall realization improvement, highlighting strength in the Northeast market.

Asked by Navin Sahadeo

Detailed CAPEX plan and timeline for new projects (Rajasthan, Haryana, Bihar, Umrangso). Direct
So, the overall CAPEX for these four projects is about 4,800 crores... I think towards the second half of FY29 or beginning of FY30, these all plants should be commissioning... the Nimbol Rajasthan plant will start sooner than the Umrangso plant.

Provides a comprehensive overview of the company's ambitious expansion plans, including locations, capacities, total investment, and expected commissioning timelines.

Asked by Kamlesh Bagmar

Realism of 2,400-2,500 crores CAPEX for 5 MT greenfield capacity (Nimbol + Haryana) compared to industry peers. Direct
I feel that this number is realistic because we have just put up a kiln of about that size right now and we were able to put it up in about 1,200 crores. So, even if I take the greenfield cost and even if I take the cost of an integrated grinding unit, I think we should be able to manage in that much but I will again do the working and then probably can give you a further clarification in the next call.

Addresses concerns about the cost-effectiveness of their greenfield expansion, providing a rationale based on recent project experience, though promising further clarification.

Asked by Navin Sahadeo

Strategy for entering the competitive Northern markets with new capacity, especially regarding margin preservation. Direct
Our strategy is quite simple. We are not entering with a very large capacity. Actually, we have an integrated plant of 3 million and shortly after we commission that we will be commissioning a grinding unit in Haryana. So, the capacity that we enter is not huge. And what we would target to do is to maintain and you have to create a brand like how we have created a brand in Northeast and we sell higher than any other brand in Northeast despite being the highest volume player in Northeast. We would want the same kind of a branding and patience in marketing in North as well.

Outlines the company's cautious and brand-focused entry strategy into new, competitive markets, emphasizing margin protection over aggressive volume capture.

Asked by Siddharth Mehrotra

4 min read 8 chapters

Detailed narrative

Q3 FY26 Performance Overview

Star Cement reported a strong Q3 FY26, with total revenue reaching 880 crores, a 22.4% increase YoY from 719 crores. EBITDA (excluding exceptional items) saw a significant jump to 207 crores, nearly doubling from 107 crores in the prior year. This translated to a robust EBITDA/ton of 1,600 Rs, a 60% improvement from 1,000 Rs YoY. Cement sales volumes also grew by 16% YoY to 12.31 lakh tons, while clinker sales surged by over 800% to 0.65 lakh tons.

Nine-Month FY26 Financial Highlights

For the nine months ended December 31, 2025, Star Cement recorded total revenue of 2,603 crores, up 23.3% from 2,111 crores YoY. EBITDA for this period reached 631 crores, an impressive 96.6% increase from 321 crores last year. Profit after tax (PAT) saw a substantial rise to 243 crores, compared to 46 crores in the same period last year. The EBITDA/ton for 9M FY26 stood at 1,677 Rs, up 66.9% from 1,005 Rs YoY.

Capacity Expansion Plans and Timelines

The company has outlined an ambitious CAPEX plan of 4,800 crores over the next 3-4 years for four key projects: a 3 MT clinker plant and 3 MT grinding unit in Nimbol (Rajasthan), a 2 MT grinding unit in Haryana, a 2 MT grinding unit in Bihar, and another clinker plant in Umrangso (Assam). Commissioning for these projects is expected to commence in the second half of FY29 or early FY30, with the Rajasthan plant anticipated to start sooner than Umrangso. The estimated CAPEX for the Nimbol and Haryana projects combined is 2,400-2,500 crores, though this estimate may have a 10% deviation.

Realization and Profitability Dynamics

Star Cement's weighted average realization improved in Q3 FY26, primarily driven by a ~Rs. 20/ton increase in the Northeast region, while prices in Bihar and West Bengal remained broadly neutral. The company aims to maintain an EBITDA/ton of Rs. 600-700 in the East, potentially reaching Rs. 800 with price improvements. For the new Rajasthan market, steady-state EBITDA/ton is projected to exceed Rs. 1,000, though initial periods may see lower profitability due to ramp-up and branding investments. Overall, the company expects to maintain an EBITDA/ton of Rs. 1,300-1,400 for Star Cement in the future, with the North region specifically targeting Rs. 1,000-1,100.

Cost Structure and Fuel Mix

Freight costs increased in Q3 FY26 due to a one-off strike in Meghalaya in October, which disrupted clinker movement and necessitated the use of more expensive rake transport. Management expects this abnormal hike to normalize in Q4. The company maintains a 2.8 lakh tons of coal inventory, sufficient for approximately four months, with the per kcal cost stable at 1.2. The fuel mix for Q3 included 15% biomass and 5% spot purchases, with the FSA component being unclear from the transcript.

Non-Cement Business and Green Initiatives

The AAC block business generated 13 crores in revenue in Q3 FY26, operating at 45% utilization during its commissioning phase. At full utilization, this segment is expected to generate 90-100 crores in revenue. For the full FY26, non-cement revenue is projected to be around 45 crores, with a target of 100 crores and a 20% EBITDA margin for FY27. The company is also discussing a 50 MW solar project, potentially in Rajasthan, with updates expected in the next investor call.

Incentives and Capital Allocation Strategy

Incentive income declined to 33 crores in Q3 FY26, a 28% YoY drop, primarily due to the reduction of GST from 28% to 18%. The company aims to keep its debt-to-EBITDA ratio below 1.5x and plans to undertake a QIP if this threshold is approached to fund its expansion. Rajasthan projects are expected to benefit from a capital subsidy of approximately 23% of the CAPEX. The Silchar plant is expected to start contributing to subsidy benefits from Q4 next year after utilizing input GST for 7-8 months.

Market Entry Strategy for North

Star Cement plans a cautious entry into the Northern markets, focusing on brand building and deep penetration rather than aggressive volume capture at the expense of margins. The strategy involves not entering with very large capacities initially, starting with a 3 MT integrated plant and a subsequent grinding unit in Haryana. The company aims to replicate its Northeast success, where it sells at a premium despite being the highest volume player, by focusing on branding and patience in marketing in North as well.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Construction Materials earnings calls