STARCEMENT Q1 FY27 earnings call.
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Revenue
₹943 Cr
verified against source
Revenue YoY
9.4%
reported change
EBITDA
₹203 Cr
latest reported figure
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What the record says.
Star Cement reported a weak Q1 FY27 with EBITDA declining 11.7% YoY to ₹203 crore and PAT dropping 24.5% YoY to ₹74 crore, impacted by a 40 crore GST-related subsidy hit and elevated fuel costs. EBITDA margin compressed by 526bps YoY to 21.9%, though volumes grew 6.5% YoY (cement sales at 13.02 lakh tonnes). Management flagged headwinds from Assam floods and muted demand in Q2 but expects pent-up demand recovery in Q3-Q4. Fuel cost rose sharply to 1.55 (from 1.24 in Q4) due to coal diversion to power plants; guidance is to bring it down to 1.45 in Q2. Full-year volume growth guidance was revised down from 11-12% to 8-9% citing SAM floods and weak demand. Rajasthan project (3MT clinker + 3MT grinding) remains on track for Q1 FY29 with EC expected by October 2026. Incentive income guidance trimmed to ₹115 crore from ₹145 crore due to Assam government policy change amortizing subsidy over 12 years. Key risks: competitive intensity from Dalmia, fuel price volatility, and extended weak demand in core northeast market.
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Guidance to track
- Down from earlier estimate of 11-12% due to prolonged monsoon, Assam floods impacting Q1 and Q2, and overall weak demand environment in SAM. Double-digit growth expected only from Q3-Q4.
- Expect improved FSA (fuel supply agreement) coal allocation as power plant demand normalizes; further reduction to ₹1.35-1.40 targeted for Q3-Q4.
- Environmental clearance expected October 2026; ground construction to begin November 2026 with 22-26 month timeline. Total capex ₹2,700-2,900 crore including GST.
- Prices broadly flat QoQ in NE and Bihar; price increase contingent on demand recovery post-monsoon in Q3-Q4. Bihar prices Rs.10/bag higher than NE.
Risks flagged
- The state government has changed the incentive payout mechanism from a variable SGST-offset model to a fixed 12-year amortization schedule. This has reduced FY27 incentive estimate by ₹30 crore to ₹115 crore. Outstanding receivables stand at ₹130 crore with total eligible subsidy of ₹794 crore remaining.
- July volume declined 12% YoY as Assam was completely shut down due to flooding. Management acknowledged the situation has not improved materially in August, creating risk of negative YoY growth in Q2—contrary to earlier expectations.
- Management flagged that outside producers are now entering the northeast market with clinker, which will pressure Star's clinker sales. Previously viewed as a stable revenue stream, this segment now faces headwinds.
- PP bag prices linked to international crude oil and geopolitical factors (Russia-Ukraine war) remain elevated and are beyond management's control. Combined with higher fuel costs, margin recovery in H2 FY27 depends on demand-led price increases that may not materialize.
Key quotes
- The GST rate was reduced from 28% to 18%... in quarter one alone 40 crores was a hit because of that. If we actually exclude that hit of 40 crores then I think we were positive a bit in terms of percentage in absolute terms.
- I don't think it's because of the competition and I don't think we've lost any market share in northeast compared to last quarter or same quarter last year.
- The fuel cost in Q4 was about 1.33 which has gone up to 1.55. We expect in Q2 onwards the cost should come down to about 1.45.
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