Star Cement posted its strongest financial performance in recent years and is now pursuing an ambitious expansion beyond its Northeast stronghold.
The company, in which UltraTech Cement holds an 8.42% stake, plans to invest around ₹2,200 crore in new projects across Rajasthan, Haryana, Bihar and Assam. The expansion could take its cement capacity to about 9 million tonnes over the next four to five years.
FY26 was the company’s strongest year
Star Cement reported growth across revenue, operating profit and net profit during FY26.
For the full year:
- Revenue rose to ₹3,776 crore, from ₹3,163 crore in FY25.
- EBITDA, excluding exceptional items, increased to ₹955 crore, compared with ₹589 crore.
- Profit after tax climbed to ₹390 crore, up from ₹169 crore.
- EBITDA per tonne improved to ₹1,738, against ₹1,245 a year earlier.
The March quarter also delivered strong numbers.
Q4 FY26 performance
- Revenue stood at ₹1,174 crore, compared with ₹1,052 crore in Q4 FY25.
- EBITDA increased to ₹324 crore, from ₹268 crore.
- Profit after tax rose to ₹147 crore, against ₹123 crore.
- EBITDA per tonne improved to ₹1,871, from ₹1,748.
Cement sales volume during the quarter reached 16.18 lakh tonnes.
Of this:
- 11.27 lakh tonnes came from the Northeast.
- 4.91 lakh tonnes were sold outside the region, mainly in West Bengal and Bihar.
The company achieved the upper end of its FY26 volume guidance of 5.5 million tonnes.
FY27 starts with some challenges
Management has guided for 10-12% volume growth in FY27 on a base of around 5.3 million tonnes.
Demand in April was weaker than usual because of state elections in Assam and West Bengal. The company expects June to provide a better indication of demand trends for the year.
Higher costs have also emerged.
Coal rake shortages, caused by supply diversion to thermal power plants, are expected to push fuel costs higher by ₹0.15-₹0.20 per GCV.
Overall, Star Cement expects cost pressures of ₹250-₹300 per tonne during the first half of FY27.
The increase is mainly linked to:
- Fuel sourcing.
- Packing costs.
To offset part of the impact, cement prices have been raised.
- Prices in the Northeast have increased by around ₹6-₹7 per bag.
- North Bengal prices have risen by about ₹10 per bag.
Management expects costs to normalize by Q3 and Q4 FY27.
Its medium-term EBITDA per tonne guidance for Northeast operations remains at ₹1,500-₹1,700.
₹2,200-crore expansion marks a shift beyond the Northeast
The company’s biggest growth initiative is its planned entry into North India.
Star Cement has identified five greenfield projects.
They include:
- A 3.3 million tonne clinker plant at Nimbol, Rajasthan.
- A 2-2.5 million tonne grinding unit in Haryana, supplied by clinker from Rajasthan.
- A 2 million tonne grinding unit in Bihar.
- A clinker plant at Umrangso, Assam.
- A grinding unit at Jorhat, Assam.
These projects could take total cement capacity to around 9 million tonnes.
Capex to accelerate over the next two years
Capital expenditure for FY27 has been revised upward.
The company now expects spending of ₹600-₹700 crore, compared with earlier guidance of ₹500-₹600 crore.
FY28 capex is estimated at ₹1,500 crore.
The Bihar and Rajasthan projects are targeted for commissioning during Q1-Q2 FY29.
Clinker supply for Bihar will come from the Meghalaya plant through the Silchar railway siding.
Management said blended EBITDA per tonne could moderate to ₹1,300-₹1,400 after Rajasthan operations ramp up.
However, higher volumes are expected to support absolute EBITDA growth.
New rivals are entering the Northeast
Star Cement’s core market is attracting larger competitors.
Companies that have announced expansion plans in the region include:
- Shree Cement
- JK Lakshmi Cement
- Ambuja Cement
Management expects additional competition to create some pricing pressure. It also believes aggressive price cuts are unlikely because of the high investment required to build capacity in the Northeast.
Industry estimates put the cost of setting up capacity in the region at $160-$180 per tonne.
Distribution network remains a key advantage
Star Cement said its biggest strength lies in its distribution reach.
The company has a 78% trade market share in the Northeast, the highest among regional players.
Its network has been built over two decades.
Management believes new entrants could take three to four years to establish a meaningful presence in the market.
About the company
Star Cement Limited is headquartered in Kolkata and operates clinker and cement plants mainly in Meghalaya.
Its markets include:
- The Northeast.
- West Bengal.
- Bihar.
Alongside cement expansion, the company is also growing its AAC blocks and ready-mix concrete (RMC) businesses.
It has targeted ₹150 crore of revenue from these segments in FY27.
TL;DR:
Star Cement reported record FY26 earnings and is investing about ₹2,200 crore to expand into North India. New projects across Rajasthan, Haryana and Bihar could lift capacity to around 9 million tonnes, though rising costs and increasing competition remain challenges.
AI Summary
- FY26 profit after tax rose to ₹390 crore from ₹169 crore.
- Star Cement plans a ₹2,200-crore expansion across multiple states.
- Capacity could increase to around 9 million tonnes.
- FY27 volume growth guidance stands at 10-12%.
- Competition in the Northeast is set to intensify.
