Star Cement - Robust Volume, Industry-Leading Margin Outlook: HDFC Securities

HDFC Securities Institutional Equities

Star Cement Ltd. is well-poised to achieve a robust 19% volume compound annual growth rate during FY23-26E, driven by its upcoming expansions in the northeast region.

Additionally, its cost curve is likely to continue to trend down due to a cool-off in fuel prices, a rising share of low cost green power, and operational leverage gains.

The forthcoming expansions will also bring in healthy GST incentives, aiding Star Cement in gaining further market share in the NE region and boosting sales outside the NE area.

These factors should buoy the overall margin to ~Rs 1,450/million tonne in FY26, maintaining Star’s industry-best margin performance from FY23-26, in our view.

Hence, we maintain our 'Buy' rating on the company with an unchanged target price of Rs 190/share (nine times September-25E consolidated Ebitda).

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