'Buy' Star Cement Maintains HDFC Securities, Sees Multiple Growth Triggers

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HDFC Securities Report

We maintain our Buy rating on Star Cement Ltd. with an unchanged target price of Rs 240/share (11 times FY27E consolidated Ebitda). We recently interacted with the management on the company’s growth prospects.

Star’s industry-best margin performance should continue to be buoyed by resumption of large GST incentives FY25 onwards along with savings from rising share of low-cost green power and stabilization of recently-commissioned kiln.

It is also augmenting its TSR share to ~15% by H1 FY26 and invested in a large fleet of trucks to reduce freight cost volatility. We estimate Star Cement will deliver 11% volume CAGR during FY24-27E, and its margin will expand to ~Rs 1,430/metric tonne during FY26-27E.

Star’s cement capacity will expand by another 4 million metric tonne by FY27-end with upcoming expansions in the north-east region which will bolster its market leadership.

It has also won limestone mines in Rajasthan and Assam, which will pave the way for future expansions.

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