Star Ferro & Cement (STAFER) Research Report By ICICI-Direct

Star Ferro Cement (SFCL) is the largest cement player in the North-East region (NER) with over 23% market share. Being located in a geographically complex region, SFCL enjoys a competitive advantage in the NER, which also imports cement from other neighbouring states leading to higher cement prices in the NER region. Demand growth in this region has consistently remained higher than the growth at pan-India level. In order to reduce imports, the company has expanded its capacity from 1.5MT in FY13 to 3.6 MT in FY15. This, in turn, has helped SFCL to gain market share in the NER. With the government’s thrust on infrastructure development, we expect demand growth in this region to remain healthy over the next 3-4 years. Given this backdrop, we expect the company to clock revenue CAGR of 25.5% in FY15-17E. We initiate coverage on Star Ferro Cement with a BUY recommendation.

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