Star Cement Ltd Q3 FY2026 Concall Summary

Key Takeaways

• Volume-led earnings jump, aided by price: Cement sales grew 16% YoY while EBITDA per ton rose from ₹1,000 to ₹1,600, driven by a ~₹20 price increase in the Northeast and a richer premium mix.
• Logistics cost spike is one-off: Freight costs jumped 13% YoY and 6% QoQ due to a seasonal cyclical increase and a strike in Meghalaya that forced a modal shift; management expects no material impact in Q4.
• Expansion blueprint is now concrete: The company firmed up a ₹2,400–₹2,500 crore plan to enter Rajasthan with a 0.3 crore ton integrated plant and a Haryana grinding unit, targeting commissioning around the second half of FY29.
• Northeast pricing confidence holds: Management sees prices as stable even after a competitor’s new kiln came online and has no plans for further hikes, aiming simply to maintain current levels.
• What to watch next quarter: Whether the Silchar grinding unit commissions on time and begins contributing to volumes, the trajectory of the premium cement mix, and any further clarity on the phasing of the ₹4,800 crore capex plan.

Volume & Realisation

• Volume growth was broad-based: Cement sales hit 12.31 lakh tons, up 16% YoY, while clinker sales jumped from a negligible base to 0.65 lakh tons, a volume management expects to sustain at 5–6% of the total each quarter.
• Realisation got a Northeast lift: Weighted average realisation improved primarily on a ~₹20 per ton YoY price increase in the Northeast; pricing in Bihar and West Bengal was broadly neutral as a rise in Bihar offset a fall in West Bengal.
• Premium mix is shifting fast: The share of premium cement in trade sales rose from 12% to 17.1% over the past year, a mix shift that directly supported the realisation improvement.
• Non-trade share is creeping up: The non-trade mix moved from 19% to 22% of overall volume over one year, a structural shift that typically carries a lower realisation but helps absorb fixed costs.
• Q4 volume growth guided at 8–12%: Management expects cement volume growth of 8–10% YoY and overall volume growth of 10–12% YoY in Q4, with full-year FY26 volume landing around 0.53–0.54 crore tons.

Management: "I do see that the pricing even after Dalmia's kiln has come to operation, has broadly been stable. So, I don't see a price problem for the coming year as well."

Costs & Margins

• EBITDA per ton more than doubled YoY: Per-ton EBITDA rose from ₹1,000 to ₹1,600, driven by the realisation improvement and operating leverage on the 16% volume growth.
• Logistics cost spike was a one-off: Freight costs rose 13% YoY and 6% sequentially, driven by a normal seasonal increase of ₹60–70 per ton from Q2 to Q3 and a one-off hit from a Meghalaya strike in October that restricted clinker movement and forced a shift to rakes.
• Subsidy income fell on lower GST rates: Incentive income declined 28% YoY to ₹33 crores because the GST rate reduction from 28% to 18% mechanically shrank the subsidy amount, a structural reset rather than a clawback.
• Depreciation will stay flat near-term: Quarterly depreciation will remain around ₹90 crores; the Silchar plant’s commissioning will add depreciation that neutralises any reduction elsewhere.
• Coal costs are locked and stable: With 2.8 lakh tons of coal secured at ₹1.2 per kcal, management expects cost stability for the next 3–4 months; supply is insulated from the Meghalaya illegal mining crackdown because most coal comes via FSA from Coal India.

Management: "That had increased our logistics cost. And that is why you see abnormal hike in our logistics cost compared to last quarter or YOY which I don't think you will see from Q4 when you compare Q4 to last year's quarter."

Expansion Projects

• Rajasthan entry is the headline move: The company has firmed up a plan to enter the North with a 0.3 crore ton integrated clinker and grinding plant at Nimbol (Jodhpur district) and a 0.2 crore ton grinding unit in Haryana, fed by Nimbol clinker.
• Land and approvals are progressing: A sale agreement for the Rajasthan land is broadly done and the entire land is expected to transfer in the next 1–1.5 months; the EC application has already been filed on that land. A plot for the Haryana grinding unit has been identified and the acquisition process is starting.
• Bihar grinding unit replaces Jorhat: A 0.2 crore ton grinding unit in Bihar has been prioritised over the previously planned Jorhat unit; Jorhat is deferred and will come later alongside the Umrangso clinker plant in Assam, which is roughly 3.5 years out.
• Umrangso EC expected by September: The company has applied for environmental clearance for the Umrangso clinker plant and expects to receive it by September this year.
• All four projects target a similar window: Management aims to move all four projects (Bihar, Nimbol, Haryana, Umrangso) together as fast as possible, with commissioning expected toward the second half of FY29 or the beginning of FY30; grinding units will come online sooner than the clinker plants.
• Nimbol CAPEX estimated at ₹2,400–₹2,500 crores: The estimate covers the clinker plant, integrated grinding unit, and the Haryana grinding unit for a combined 0.5 crore ton capacity; management sees the number as realistic based on its recent kiln build cost of ~₹1,200 crores but will refine it and provide clarification in the next call.

Management: "I think in terms of priority I think it really is to move all the four projects that I mentioned together as fast as we can because they are at different stages of completion from an EC perspective and from a groundbreaking perspective."

Northeast Operations & Silchar

• Silchar commissioning is imminent: The Silchar grinding unit will be commissioned between the 20th and 27th of the current month (February 2026), adding grinding capacity in a market the company already serves.
• Subsidy benefit from Silchar is delayed: Silchar will first use input GST credit from the project, which takes at least 7–8 months to fully utilise; the subsidy benefit is therefore expected only from Q4 of next year onward.
• Northeast capacity is now sufficient: With Silchar coming online, management believes it has enough capacity in the Northeast to serve the market and sees no immediate need for the deferred Jorhat unit.
• Lead distance is improving: Average lead distance fell from 220 km to 212 km, a small but directionally positive move that supports logistics cost control.
• Bangladesh exports are not viable: An analyst asked about exporting cement to Bangladesh from the Silchar unit given its proximity; management ruled it out, citing no direct road, unfeasible barges in the rainy season, and a prohibitive Bangladesh customs duty of ~₹2,000 per ton.

New Businesses & Diversification

• AAC block plant is still ramping up: The AAC block plant operated at 45% utilisation in its second quarter of commissioning and generated ₹13 crores in revenue; it is still in the early ramp-up phase.
• Non-cement revenue is building slowly: FY26 non-cement revenue is expected at ₹45 crores with a breakeven result; next year the target is ₹100 crores with a minimum 20% EBITDA margin.
• Solar project is being relocated: The 50 MW solar project originally planned for Assam is now being considered for Rajasthan instead due to regulatory changes; management will provide an update in the next quarter’s call.
• North entry will be brand-led, not price-led: Management explicitly ruled out discounting to buy volumes in the new Rajasthan market, stating it will build a brand through patience and marketing, as it did in the Northeast, even if that means lower initial volumes and a ramp-up period with EBITDA below the steady-state expectation of more than ₹1,000 per ton.

Management: "It is of course tempting to sell more volumes but it comes at the cost of putting yourself at a lower price band. So, we will have to make sure and have the patience and the willpower to create a brand in the long run. And discounting and selling and just trying to get done with the volume is not the answer to that."

Guidance & Commitments

Key Metrics