Star cement highly efficient cement player from north east

star cement enjoys highest EBIDTA per ton in the industry higher even then biggest player like Ultra tech cement.
Star cement will report extremely strong number for next many quarters starting from Q2 that is current quarter.

1. March 2024 company commissioned 2.0 MT grinding unit in Assam From current quarter 800 per ton incentive will start flowing.

2. April 2024 company commissioned 3.3 MT clinker unit this will be a big benefit for start cement and here also company will receive 300 per ton INCENTIVE. Both the above will Add close to 175-190 cr of benefit in FY25 For FY26 this number will be close to 250 Cr as it will get benefit in Q1 as well. In Q1 company also started receiving coal from coal India for which it has entered a pact for 10 years and it will receive 3.6 lac MT and this will bring its cost of coal down to 1.5 per unit vs 1.8 which means saving of 70cr I full year which means 40-45 Cr benefit will be added in balance FY25.

Another benefit will be WHRS plant which will commission in August 2024 which will again lead to very good saving in energy cost. Another big positive is lower tax rate. As the Assam plant was commissioned before 2024 new tax rate for this plant will be 17% vs 25% so consolidated effective tax rate for FY25 will be around 21% leading to another 4% saving due to lower tax.
We expect consolidated EBIDTA per ton to be Around 1600 for balance 3 quarters of the year. And for FY26 this will be even higher this will be highest in industry and 50% higher then best and largest player in industry. Company has extremely strong and almost debt balance sheet despite huge capex it is doing. All the capex is done from internal accrual and cash flow are expected to be very strong.

New capacity of 2MT is coming online next year and 2 MT IN FY 27 and with huge incentive benefits this will give very good visibility for growth and support valuations. Star cement should be highest allocation in your portfolio as it has very limited downside risk and we expect target price of 300-325 in next 6-7 Months.

Star cement has also gained market share from 25 to now 27% in north east. Also till date cement was imported in north east from west bengal and some from Bangladesh with star cement new capacity coming online this cement will stop coming in north east and star cement will continue to gain market share.

Link to latest investor presentation:- https://www.bseindia.com/xml-data/corpfiling/AttachLive/d5530b8b-9434-4edc-9e2d-3fa051541d4e.pdf

@Dialwealth_in