Target: ₹155

CMP: ₹142.90

Leveraging its strategically located plants, easy availability of raw materials at competitive rates, and superior brand recall, Star Cement commands an estimated market share of 23 per cent in the North-East. Its total current capacity stands at 5.7 MTPA of Grinding and Clinker at 2.9 MTPA with robust distribution network in North-East and Eastern India.

The company’s capacity expansion plan is progressing well and 2 MTPA of grinding capacity each in Guwahati and Silchar is expected to be operational in Q3FY24/Q2FY25 along with 3 MTPA Clinker units in Meghalaya in January 24. This will take the total grinding capacity of the company to 9.7 MTPA, thereby creating more growth headroom for it, moving forward. We expect the company to grow its volume/revenue at a CAGR of 14 per cent/13 per cent over FY23-FY25.

The company reported impressive EBITDA/tonne of ₹1,345 in Q4FY23 and we expect current EBITDA/tonne to sustain on the back of higher volume, stable realisation, lower variable cost, and other cost optimisation measures. The benefit of the WHRS plant (12.4 MW) has started to flow in in from May 23 and it will entail cost savings of ₹30-35 crore in overall power/fuel cost per annum. We expect the EBITDA/tonne to improve from ₹1170/tonne in FY23 to ₹1,300/tonne in FY24.