Star Cement

Star Cement reported a strong Q3 FY26, with total revenue reaching 880 crores, a 22.4% increase YoY from 719 crores. EBITDA (excluding exceptional item^📎s) 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.

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.

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.

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.

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.

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.

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.

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.