Star Cement Limited is a prominent cement and clinker manufacturer, commanding a leadership position in the Northeast Indian market. The company has built a strong brand reputation in this region, enabling it to achieve premium pricing and maintain stable profitability. Its product portfolio primarily consists of Ordinary Portland Cement (OPC) and Portland Pozzolana Cement (PPC), with a growing emphasis on premium products. While its core operations are concentrated in the Northeast, Star Cement is strategically expanding its footprint into Eastern India, including West Bengal and Bihar, and has laid out an ambitious plan to enter the highly competitive North Indian markets of Rajasthan and Haryana. This geographical diversification strategy is aimed at driving future growth and de-risking its business from regional concentration. The company is also venturing into adjacent building materials, such as Autoclaved Aerated Concrete (AAC) blocks, to create new revenue streams. Led by Deputy Managing Director Tushar Bhajanka and CFO Manoj Agarwal, the management team is focused on disciplined capital expenditure, brand building, and maintaining a healthy balance sheet to fund its next phase of growth.

Official Website: https://www.starcement.co.in/earnings-call#main

• Q3 FY26 Performance:

• Total Revenue: Reached 880 crores, a significant increase from 719 crores in the same quarter last year.

• EBITDA: Grew to 207 crores, nearly doubling from 107 crores year-over-year (YoY).

• Profit After Tax (PAT): Stood at 74 crores, a substantial rise from 9 crores in the prior year's quarter.

• 9M FY26 Performance:

• Total Revenue: Recorded at 2,603 crores, up from 2,111 crores for the same period last year.

• EBITDA: Reached 631 crores, a strong increase from 321 crores YoY.

• Profit After Tax (PAT): Amounted to 243 crores, compared to 46 crores in the same nine-month period last year.

• Key Metrics & Other Items:

• EBITDA per Ton: Improved to 1,600 in Q3 FY26 (vs. 1,000 YoY) and 1,677 for 9M FY26 (vs. 1,005 YoY).

• Incentive Income: Booked 33 crores in Q3 FY26, a decrease from 43 crores YoY. This reduction is attributed to a drop in the GST rate, which directly impacts the subsidy amount.

• Depreciation: The company guides for a steady depreciation of approximately 30 crores per month, or 90 crores per quarter.

• One-Off Cost: A 5 crore political donation was booked as a one-off expense in Q3 FY26.

The company demonstrated robust financial performance with strong growth in revenue, EBITDA, and profitability, driven by higher volumes and improved operational efficiency.

• Northeast Market Dominance: The company's primary strength lies in its leadership position in the Northeast, where it commands pricing power. Realizations in this region increased by approximately Rs. 20 per bag YoY, which offset pricing weakness in other markets.

• Brand-Led Strategy: Management emphasizes building a premium brand rather than competing solely on volume. This strategy is central to its plan for entering new markets like North India, mirroring its success in the Northeast.

• Focus on Premium Products: The share of premium cement in trade sales has increased from 12% to 17.1% over the last year. This shift in product mix contributes positively to average price realization and margins.

Star Cement's business model is anchored in strong regional dominance and a brand-focused strategy, allowing it to achieve superior profitability and premiumization.

• Northeast India Pricing: The pricing environment in the Northeast is stable and holding firm. Despite new capacity additions in the region by competitors like Dalmia, management does not foresee a price war or significant disruption in the coming year.

• Eastern India Pricing: The markets of West Bengal and Bihar have been challenging, with overall prices taking a hit. While Star Cement experienced a price drop in West Bengal, it was offset by a slight increase in Bihar, resulting in a neutral pricing impact from this region.

• Coal Supply: The company does not anticipate any disruption to its coal supply from the crackdown on illegal mining in Meghalaya. Its procurement is secured through a Fuel Supply Agreement (FSA) with Coal India (78.8%), supplemented by spot contracts and biomass (15%).

The industry outlook remains favorable in the company's core Northeast market with stable pricing, while the Eastern market presents a more challenging environment.

• Sales Volume Growth:

• Total cement sales volume grew 16% YoY in Q3 FY26, reaching 12.31 lakh tons.

• Clinker sales for the quarter stood at 0.65 lakh tons.

• Geographical Growth:

• Northeast: Sales grew from 8.37 lakh tons to 9.36 lakh tons YoY.

• Outside Northeast (East India): Sales saw strong growth from 2.24 lakh tons to 2.95 lakh tons YoY.

• Future Volume Guidance:

• The company expects to achieve its full-year volume guidance of approximately 5.3 to 5.4 million tons for FY26.

• A volume growth rate of 10-12% YoY is anticipated for Q4 FY26.

• Volume growth in FY27 is expected to be similar to the trajectory seen in FY26.

The company is delivering strong, double-digit volume growth, driven by expansion in both its core and adjacent markets, with a positive outlook for the near term.

• Plant Utilization: The Siliguri grinding unit operated at 60% utilization in Q3 FY26. This is expected to ramp up to 70-75% in Q4 FY26.

• FY26 CAPEX: The company has incurred 431 crores in capital expenditure in the first nine months of FY26 and plans to spend an additional 150 crores in Q4, totaling approximately 581 crores for the full year.

• Future CAPEX Plan: A major expansion cycle is planned with a total outlay of approximately 4,800 crores over the next 3-4 years. This will fund projects in Bihar, Rajasthan, Haryana, and a new clinker line in Umrangso, Assam.

• Financing: The expansion will be financed through a mix of internal accruals and debt. The company aims to maintain a comfortable Debt-to-EBITDA ratio of less than 1.5x and may raise capital through a Qualified Institutional Placement (QIP) if required.

Star Cement is in a significant CAPEX cycle to fund its next wave of growth, supported by a clear financing strategy to maintain a healthy balance sheet.

• North India Entry (Rajasthan & Haryana):

• This is the company's flagship expansion project. It involves setting up a 3 million ton clinker plant with an integrated 3 million ton grinding unit in Nimbol, Rajasthan, and a separate 2 million ton grinding unit in Haryana.

• Environmental Clearance (EC) is expected by September-October 2026, with construction to begin shortly after. The project is estimated to take 18-22 months to commission from groundbreaking.

• The total estimated CAPEX for this 5 million ton expansion is around 2,400-2,500 crores.

• East India Expansion (Bihar):

• A 2 million ton grinding unit is planned for Bihar. The company is currently in the land acquisition phase for this project.

• This unit will initially be fed with clinker from existing plants in the Northeast, improving their utilization.

• Northeast Expansion (Umrangso):

• The company has applied for an EC for a new clinker plant in Umrangso, Assam, to support long-term growth in its home market.

• This project will likely be commissioned around FY29.

• Near-Term Commissioning:

• The Silchar grinding unit is set to be commissioned in February 2026.

• The planned grinding unit in Jorhat, Assam has been deferred and will now likely be developed alongside the new Umrangso clinker plant.

The company has a clear and ambitious roadmap for growth, focusing on geographical diversification into North and East India while simultaneously strengthening its core Northeast operations.

• Current Profitability: EBITDA per ton remains strong at 1,600 for Q3 FY26 and 1,677 for the nine months ended Dec 2025.

• Regional Profitability:

• East India: EBITDA per ton in this market is currently around 600-700, with the potential to increase to 800 with better pricing.

• North India (Projected): Management is targeting a steady-state EBITDA per ton of over 1,000 in Rajasthan. Initial margins will be lower due to ramp-up and brand-building expenses.

• Overall Margin Guidance: Despite the entry into new, more competitive markets, the management expects to sustain a blended, company-wide EBITDA per ton in the range of 1,300 to 1,400 in the long run.

• Cost Structure:

• Fuel Cost: The current fuel cost is 1.2 per kcal, and the company holds about four months of coal inventory at this rate, providing near-term cost visibility.

• Freight Cost: A one-off transport strike in Meghalaya caused an abnormal spike in Q3 freight costs. This is not expected to recur, and freight costs should normalize going forward.

The company is maintaining industry-leading margins and has a clear strategy to sustain strong profitability even as it diversifies its geographic footprint.

• Northeast Market: While a major competitor (Dalmia) has recently commissioned a new kiln in the region, Star Cement's management remains confident that its brand strength and market position will help maintain price stability.

• North India Market: Management acknowledges that the North is a competitive market with several new entrants (e.g., JSW, Dalmia) planning significant capacity additions. Star Cement's strategy is not to engage in a price war but to focus on a calibrated entry, building its brand patiently to secure a premium position, similar to its approach in the Northeast.

Management is aware of the competitive challenges in both existing and new markets and plans to counter them by leveraging its core competency in brand building.

• Execution Risk: The company is undertaking multiple large-scale greenfield and brownfield projects simultaneously (totaling 4,800 crores), which exposes it to potential delays, cost overruns, and other execution-related challenges.

• Competitive Intensity in New Markets: Entering the North Indian market will pit the company against well-entrenched national players. Achieving the targeted market share and profitability will depend heavily on the successful execution of its branding and marketing strategy.

• Freight Cost Volatility: As seen in Q3, logistics disruptions can significantly impact costs. While the recent spike was a one-off event, the company's geographically dispersed operations remain exposed to potential volatility in freight rates.

The primary risks are centered on the successful execution of its ambitious expansion plans and navigating the competitive pressures in new geographies.

• AAC Block Business:

• This new non-cement venture generated 13 crores in revenue in Q3 FY26.

• The company projects 45 crores in revenue for the full year FY26 and targets 100 crores in FY27.

• While currently operating at a breakeven level, it is expected to achieve a 20% EBITDA margin in FY27.

• Limestone Sourcing for Rajasthan:

• The company has secured an auctioned mine with a 57% premium.

• Crucially, it is also in the process of acquiring legacy mines, which carry a 0% auction premium. Securing these would provide a significant long-term cost advantage for its North India operations.

• Sales & Product Mix:

• The non-trade (institutional) sales mix has increased to 22% of total volumes, up from 19% YoY.

• The product blend for the quarter was 18% OPC and 82% PPC.

The company is successfully diversifying into the AAC block business and is strategically working to secure low-cost limestone reserves to ensure the long-term competitiveness of its new projects.