Star Cement

Star Cement delivered strong performance in Q4 FY26, with revenue reaching ₹1,174 crores, an 11.6% increase YoY from ₹1,052 crores. EBITDA (excluding exceptional item^📎s) grew 20.9% YoY to ₹324 crores, up from ₹268 crores. PAT also saw a significant rise of 19.5% YoY to ₹147 crores. For the full year FY26, total revenue was ₹3,776 crores, a 19.4% increase from ₹3,163 crores in FY25. Full year EBITDA (excluding exceptional item^📎s) surged 62.1% YoY to ₹955 crores, and PAT more than doubled to ₹390 crores from ₹169 crores in FY25. EBITDA per ton for Q4 FY26 was ₹1,871, and for the full year FY26, it was ₹1,738.

In Q4 FY26, clinker production was 11.59 lakh tons, slightly up from 11.38 lakh tons YoY. Cement production increased to 16.45 lakh tons from 14.79 lakh tons YoY. Cement sales volume for the quarter was 16.18 lakh tons, up from 14.75 lakh tons, while clinker sales were 1.15 lakh tons. The company achieved its FY26 volume guidance of 5.5 million tons, with actual cement volume at 5.3 million tons. For FY27, Star Cement targets 10-12% volume growth for cement. Northeast sales accounted for 11.27 lakh tons in Q4 FY26, with a blend mix of 18% OPC and the rest PPC.

Star Cement is pursuing significant capacity expansion, with an estimated capex of ₹600-700 crores for FY27 and ₹1,500 crores for FY28. These investments are primarily for land acquisition and approvals for grinding units in Nimbol (Haryana) and Bihar. The Bihar grinding unit, with a capacity of 2 million tons, is expected to be operational by Q1/Q2 FY29. The Rajasthan project, involving a 3 million-ton clinker plant and 5 million-ton grinding capacity, has a total capex of ₹2,400-2,500 crores (plus 10% variation) and is targeted to start by September 2028 or 1H FY29. Jorhat will also see a 2 million-ton grinding unit around the same time. Clinker for Bihar will be sourced from Meghalaya and transported via Silchar's railway siding.

The company anticipates an increase in fuel costs in Q1/Q2 FY27, estimated at INR 0.10-0.15 per GCV for coal and INR 0.15-0.20 overall, mainly due to rake diversion to power plants and SSA shortages. The overall cost impact for Star Cement in H1 FY27 is projected to be INR 250-300, primarily from packing bags and fuel. Despite this, pricing has seen some improvement, with Northeast prices up INR 6-7 per bag and outside Northeast up INR 10 per bag. However, Q1 FY27 EBITDA is expected to face pressure from cost inflation. The company expects to maintain an EBITDA/ton of INR 1,500-1,700 in the Northeast until the Rajasthan project, and a blended INR 1,300-1,400 in the long run.

Subsidy accrual for FY27 is projected to be around INR 145-150 crores, a reduction of INR 40-50 crores from FY26's INR 184 crores. Star Cement has applied for FCSC benefits in Bihar, which are expected to offset incremental costs. The non-cement revenue, including AAC, RMC, and allied products, reached INR 43 crores in FY26. The company targets INR 150 crores in non-cement revenue with an initial margin of 7-8%, focusing on market creation. The premium cement share for Q4 FY26 was 15.1%.

The green share in Q4 FY26 was 33.8%, with an expectation of 30-33% for FY27. Management noted that they have not invested in new green energy sources like wind and solar due to falling IEX rates, instead exploring a group captive power agreement. Regarding competition, management believes it will take 3-4 years for new players to significantly enter the Northeast market. While new entrants like Shree Cement, Ambuja, and JK Lakshmi have announced plans, Star Cement believes the Northeast market is relatively small, and new players will need to consider the impact on their own profitability and the market dynamics.