Star Cement Limited (STARCEMENT.BO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Star Cement Q2 and Half Year Ended FY '26 Earnings Conference Call ended 30th September,, hosted by PhillipCapital India Private Limited. Please note that this conference is being recorded. I now hand the conference over to Mr. Vaibhav Agarwal from PhillipCapital India Private Limited. Thank you, and over to you, sir.

Yes. Thank you, Sagar. Good evening, everyone. On behalf of PhillipCapital India Private Limited, we welcome you to the Q2 FY '23 Earnings Call for Star Cement Limited. On the call, we have with us Mr. Tushar Bhajanka, Deputy Managing Director; and Mr. Manoj Agarwal, CFO of Star Cement. At this point of time, I will hand over the floor to Mr. Tushar Bhajanka for his opening remarks, which will be followed by remarks from Manoj Ji, and then we can have the Q&A. Thank you, and over to you, Tushar. Thank you.

Hi, good afternoon all. My name is Tushar Bhajanka, and I'm the Deputy MD of Star Cement. I welcome you all to the conference call of FY '26 quarter 2. I will hand -- I will like Manoj Ji, the CFO, to give his remarks regarding the numbers, and then we can start the Q&A.

Yes. Hi, friends, very good afternoon. I, on behalf of Star Cement Limited, welcome you all to our con call for discussing our number of Q2 FY '26 and half year ended September '25. I would like to clarify that we are discussing on the historical numbers, and there is no invitation to invest. Having said that now, I will just take you through the Q2 number followed by half year numbers. Starting from clinker production during the quarter ended September 2025, we have produced 9.18 lakh tons of clinker as against 6.58 lakh tons same quarter last year. So far as cement production is concerned, we have produced 10.83 lakh tons this quarter as against 9.55 lakh tons same quarter last year. Now I will take you through the sales volume. During the quarter, we have sold 10.7 lakh tons of cement and 1.01 lakh tons of clinker as against 9.62 lakh tons of cement and 0.15 lakh tons of clinker in the same period last year. This is as far as cement and clinker sale is concerned. As far as geographical distribution of cement is concerned, in Northeast, we have sold around 7.64 lakh tons as against 7.49 lakh tons during same quarter last year. As far as outside Northeast is concerned, we have sold 3.09 lakh tons of cement this quarter as against 2.13 lakh tons same quarter last year. In terms of blend mix, it is almost 16% of OPC and rest is PPC. These are the quantitative numbers of the quarter. Now I will take you through the financials. The total revenue figure for this quarter is around INR 811 crores as against INR 642 crores same period last year. As far as EBITDA figure is concerned, this quarter, we have done an EBITDA of around INR 194 crores as against INR 97 crores last year. Profit after tax is INR 71 crores as against INR 6 crores in the same period last year. On per ton EBITDA front, it is INR 1,650 during this quarter as against INR 995 per ton same quarter last year. This is what our quarterly numbers of second quarter. The total revenue figure for the half year ended September '25 is around INR 1,723 crores as against INR 1,393 crores same period last year. As far as EBITDA figure is concerned, during half year ended September '25, we have done an EBITDA of around INR 424 crores as against INR 215 crores last year. Profit after tax is INR 169 crores as against INR 37 crores in the same period last year. On per ton EBITDA front, it is INR 1,715 during the half year ended September '25 as against INR 1,000 per ton same period last year. These are the quarterly and half yearly numbers. Now I request all of you that if you have any queries, you can ask the same, and I will request Vaibhav to moderate the query wherever it requires. Thank you. Vaibhav?.

[Operator Instructions] Or first question comes from the line of Amit Murarka from Axis Capital.

The first question I had was on your expansions at Silchar and Jorhat. Could you throw some light on the update? What is the progress and the time lines for the same?

For Silchar project, we are planning to commission it in the next 3 months. We should be able to commission it by January in the next calendar year. And for Jorhat, we have acquired the land. We have applied for the permission. We are looking at the demand supply situation right now and then trying to take a call about Jorhat. It may -- we may announce a deferment of Jorhat project by a year. Instead of Jorhat, we have also started acquiring land in Bihar. There is a very lucrative scheme which has come in Bihar, which is offering 300% SBFC benefit in Bihar for whoever sets up the plant in Bihar. We are looking at East market of Bihar, specifically Central and East market, and we have identified a plot in Begusarai, which we will pursue and try to put up a plant there, and we'll come up with an assignment in the next quarterly meeting.

What will be the size of the Bihar plant? What will be the capacity of the Bihar plant?

The capacity that we're planning to put up is about 2 million. What really happens is that rather than putting up more capacity in the Northeast immediately, we will be able to cater to a larger market of Bihar. Given the SBFC benefit that we get along with it, it becomes decently viable.

Just a thought over there, like isn't the Bihar market right now seeing intense competition like with JK Cement entering the market and simply, the pricing in the market has been in a tailspin. While incentives might be there, but just to understand that part.

Yes. No. Of course, Bihar market because it is the fastest-growing market in the East India, it is -- people have anticipated that put up capacity accordingly, but because of the size of the market, first of all, we are only putting 2 million, and we already sell about 6 lakhs, 7 lakhs in Bihar market. We will try to create the market using a plant in Bihar and then put up a grinding unit in Bihar so that our capacity utilization from the very first year is better. Also, we're talking about 2 years later. The scenario of the market right now may not be the same after 2, 3 years. I think that is also a function.

What is the incentive that you mentioned that you get in this?

Bihar has come up with a new industrial policy, where you are eligible for 300% SBFC benefit. Whatever you sell in Bihar, you get the SBFC benefit also.

Just quickly also on the incentive that you booked in the quarter.

Yes. We had booked about INR 56 crores in the quarter as incentive.

[Operator Instructions] Our next question comes from the line of Navin Sahadeo from ICICI Securities.

I just wanted to understand in terms of your CapEx priorities now, what is -- like if you can just help us understand the priority. Is it the Jorhat grinding unit? Is it the Bihar grinding unit if like approvals or whatever land that you're looking at, that is a priority or the North region that we are looking, that is – the where we had some limestone mines. that is a priority. If you could just help us understand that?

Thank you for the question. Right now, after we commission Silcher, which is in the next 3 months. Hopefully, by the time we are having our next call, Silchar plant should be commissioned. Our priority will be to -- from a Northeast perspective or East perspective, our priority will be to put up the Bihar grinding unit. We've already acquired -- we have already gotten the approval from the government. We have already acquired the land also in Jorhat but we are testing [indiscernible] the project for a while because we are already getting a Silchar project up and running. I think that will give us enough capacity for Northeast. We are looking at Bihar just from a better capacity utilization of clinker perspective and also expanding our geographical reach perspective. Coming to Rajasthan in North, we had acquired mine in Jaisalmer, which was actually one of the largest mines in Jaisalmer at the lowest -- one of the lowest premium as well. Then we had also acquired mines in Nimbol area, which is Central Rajasthan, right? We are acquiring land also in Nimbol. We are trying to acquire the plant land also, the mines land also. Then we are looking at some other mines, which are non-option mines in Nimbol so that our cost of limestone will be lower once we start the plant. We plan to put up about 4 million tons in Rajasthan and Haryana, right? That is a natural expansion that we are working on. Right now, we have not come up with a very decisive presentation mainly because we are still acquiring land, we're still trying to figure out the difficulties of the terrain. In the next 5 years, if you ask me what the plan is, I think our plan involves putting up a plant in Bihar for sure, also a plant in Jorhat eventually. Our plan involves 4 million tons of clinker plus grinding in Rajasthan area. Then it, of course, involves eventually to put up another clinker plant in Northeast, which will be most likely in Umrangso area, which is Assam. For Umrangso area, we have already acquired the land. We have already acquired the mine plan. We have already acquired the permission for mining.

Just to confirm, in the scheme of things, your first priority now is a grinding unit in Bihar. Second will be Rajasthan. Third will be then Jorhat, meanwhile or Jorhat can possibly be the #2 priority.

Yes. I think our plan is, like what you said, Bihar, along with Bihar around the same time line, we are also trying to work on Rajasthan so that we can ground break and start our commissioning. At the same time, we are getting our permissions for the Umrangso clinker plant. It may take 1, 1.5 years to get those permissions, so we've already applied for it. First, we'll put up the Bihar and we'll start working on the Rajasthan plant, and after that, we put the Umrangso plant along with the Jorhat plant.

Basically, for Jorhat now to happen, we need a potential clinker line from Umrangso. As of now, the existing clinker will use towards Bihar grinding unit and existing other units. Is that correct?

Yes. For that Umrangso plant, we have already also acquired the land, the full land of the mine, land of the plant. We've also won an option mine, which has about 180 million tons reserve at about 57% premium, which is not very high given the margins in Northeast. We have already started with our work with basically getting other permissions there, EPV and other permission.

Sir, as far as your Rajasthan expansion is concerned, I believe Nimbol will be a priority over Jaisalmer, right? Or it's the other way around?

We are also just still deciding, but yes, on the face of it, Nimbol does seem to take priority over Jaisalmer, mainly because we wanted to enter north from a geographical location, which is a bit more central, so that we are able to cater to market more effectively. Jaisalmer, we had gotten that mine just from a future prospect that our second or the third line could be in the future in Jaisalmer because Jaisalmer in the next 3, 4 years, like you may already know from other commentaries of other cement companies is going to be a big hub. It's the future deposit for serving the entire north. We just thought that if we can, we should lock a mine in Jaisalmer itself.

My second question then was about your incentives, because in the GST rate cut regime, of course, there can be a decline in the annual accrual of the GST. If you can just, first of all, understand what was the GST booked in Q2 of -- what was the GST booked in Q2 of FY '26? Then if you could just take us through what -- how should one look at this accrual now from a quarterly run rate or from an annual perspective? Also, just a clarification, if the total incentive pool also gets shrink because of this GST rate cut or we can get an extension period over there. It's only the time lag and not the total incentive pool which gets compromised. Clarity this would really help.

Yes. I'm happy to provide the clarity on that. Basically, of course, the GST percentage came down, because the GST percentage came down, the SGST percentage has also come down. Hence, the reimbursement of that benefit has also come down. The impact that we feel that we'll have on the overall volume will be of about INR 130 to INR 150 per ton, so that is the impact that we feel that we'll have. That is the impact. Of course, the quantum of the benefit, which is fixed basis the CapEx that we do remains the same. I think the pace at which we consume the benefit anyway is 5 years, and we have gotten time for 15 years. The benefit that we would have otherwise accrued in 5 years may get postponed to sixth or the seventh year. We don't have to get any extension on the time line of the benefit because anyway, we have 15 years, which is more than enough for us.

Roughly, 130 million to 150 million ton impact is all that will come to us. That lag impact and not the total sales.

Yes. It's more of a time value.

[Operator Instructions] Our next question comes from the line of Shravan Shah from Dolat Capital.

Sir, just again clarifying on what right now we have discussed. First on the CapEx front. Now in 1H, we have done INR 211 crores, INR 212-odd crores. For full-year of FY '26, '27 and maybe possible for FY '28, what kind of CapEx we can look at? There also, if you can specify if we go for a Nimbol 3 million clinker and 4 million grinding. Previously, I think we have said INR 2,400 crores, INR 2,500 crores, so will it remain the same?

Sorry, can you repeat the last part?

I said that for Nimbol, if you go for a 3 million ton clinker, 4 million ton grinding, last time, I think we were looking at INR 2,400 crores to INR 2,500 crores CapEx total. Will it remain the same?

Yes, I think that broadly remains the same, about INR 2,400 crores, INR 2,500 crores for Nimbol. Again, I'll get back to you with the exact projections and everything else. Once we are completely decided at the promoter level, we'll also share a presentation of what we're thinking so that the investors really transparent to the investor how the expansion is going to take place. Answering your first question regarding the CapEx that we plan to in FY '26, remaining of FY ’26, plan to entail -- we plan to fuel about INR 500 crores of CapEx in FY '26 -- in the remaining of FY '26, mostly will be going and completing the Silchar project. Then we are also putting up a solar power plant, which is about 2 megawatts in Assam. We have already acquired the land for that as well. I think, so that INR 500 crores is broadly split between Silchar and the solar power plant in Assam.

Sir, just to again clarify. In 1H '26, we have done INR 211-odd crores, another INR 500 crores in second half. Total put together, INR 710 crores, INR 720-odd crores that we are looking at for full-year of FY '26?

Yes, exactly. This includes the major item in this is the Silchar plant, and it also includes the solar plant and it also includes the land that we have bought in Umrangso in Bihar and in Jorhat.

For next year, FY '27 and maybe for FY '28, given, let's say, if we go by what we are saying, we have 2 million tons and then the 4 million ton Rajasthan and maybe Jorhat also. In that sense, how much one can look at CapEx?

For that, I have to get back because for that, I have to first qualify my expansion plan and then only will it be fair for me to give numbers and throw numbers out. I think we will -- what we'll do is that in a month, I think we should be able to gather information and make a presentation. In a month, 1.5 months, we post the presentation, so that which will have all the details, which will have a lot of other details as well so that your question is answered. Right now, I don't think it will be fair for me to discuss.

But still a broader level, 2 million ton grinding in Bihar would be broadly the CapEx would be how much? INR 300 crores?

No, I think CapEx for 2 million tons is more than that. I think it would be about INR 500 crores, including the price of land.

In terms of time line, if we start, let's say, whenever in the next 3, 5 months, it should be commissioned by FY -- first half of FY '28, 2 years down the line?

Yes, that is what our target is.

Sir, now coming to the -- on the volume front. Last time we said we are looking at 5.4 million to 5.5 million tons for this year. We have already done a decent 16% kind of a growth. That number for full-year remains, say? Or is there a possibility of some upgrade in volume?

No, I think the number broadly remains the same. October was a good month. That gives us some confidence that going forward, probably the next quarters will be good. Again, I think on a conservative basis, I think we'll be able to meet our targets. We have also given an EBITDA estimate as well of about INR 1,500 per ton to INR 1,550 per ton, but given how it is going, I think the EBITDA is a bit more healthier than what we have set.

In terms of now full-year, though you said INR 130, INR 150 per ton incentive impact will be there because of GST. On an absolute basis, if we have to look at for full-year of this FY '26, I think last time, we were looking at INR 230 crores to INR 250-odd crores in 1H, we have already done close to INR 118 crores, INR 120-odd crores, so how much one can look at on an absolute basis?

Are you talking about EBITDA?

No, incentives, sir.

I think we may be looking at about INR 180 crores, INR 190 crores.

Lastly, sir, a couple of data points. Trade sales, premium sales, lead distance, kCal and if possible, the fuel mix.

Yes. Trade sales is 80% Premium sales is about 13.1%, the lead distance is about 230 kilometers.

And kCal?

Fuel cost is INR 1.25 per kCal.

There is a decent decline from INR 1.35 to INR 1.25 Q-o-Q. This number will remain in third quarter, similar?

Yes, I think the third quarter should be broadly similar. I don't think there's a [indiscernible].

In terms of fuel mix, spot contract, FSA and Nagaland coal?

Yes, mainly it was FSA only. I think 80%. Then rest was broadly biomass and other sources of coal.

[Operator Instructions] Our next question comes from the line of Parth Bhavsar from Investec.

Sir, I had questions on competition in the Northeast region. I wanted to -- like -- so basically, Ambuja has bought a lands and mines in the region. I wanted to understand like how do you see the competition coming up over the next 2 years? Have they like acquired any land to build a plant? Are they eligible for incentive scheme in the region?

What I know is that, of course, they have one mine in auction I think about 6 months back. The land is owned by the district council. I don't know if they have been allocated the land or not. I think -- and I'm sure they may have their plans of putting up a plant. It normally takes about 2 to 3 years to put up a plant because it's a greenfield and also in a very terrain. That is my expectation of the competition. I think Northeast generally, it has been us as the largest players in this is in Dalmia and then we have 3, 4 smaller players in Northeast, which are not listed, which are not there. I think once that entry happens, there will be a bit of a competition, I guess, but at the same time, there may be some consolidation for smaller players. Then I think it will just go as well.

Sir, how do you -- like on Ambuja plant comes in, so how do you see the profitability for the Northeast reason to fair? What would be your stance would you like to go after the market share? Or would you like up like you try to manage, improve your profitability?

Yes. I think the strategy basically -- right now, about 18% of the cement is coming from outside Northeast. That's a big number. That is mainly coming because profitability and margins in Northeast is quite good. I think -- so it has to be a combination of both. One has to hold the market share at the same time, hold the prices, and two, of course, reduce the amount of cement which is coming from outside and probably from the smaller players. I think that is an adjustment phase. I don't know how exactly will it go, but we think that the market still has a decent level of concentration, which will definitely help us in the longer run, maintain the margin.

You think you can protect this profitability even going ahead with the competition coming in?

See, I can't predict after 2, 3 years when the competition does come, what the intensity would be and what the impact on price and so on and so forth. I do understand that anyone who's getting into business, that is in the long term there to earn, so that is true for an [indiscernible] also and that's true for the incumbent also.