1. At a Glance
Star Cement is the undisputed heavyweight champ of the northeast cement market, but its growth engine is sputtering. With promoter exits, weak RoE, zero dividend, and a P/E over 50, investors are left wondering—are they building a castle or just paying for the bricks?
2. Introduction with Hook
Imagine a cement truck parked on a mountain slope—it looks solid, but the brakes (read: growth & governance) might be slipping. Star Cement, with the highest brand recall in the northeast, is dealing with a mid-life crisis.
- FY25 PAT: ₹169 Cr
- New Capacity Additions: Lumshnong line + Sonapur
- Promoter Holding Dip: From 67% to 57% in 12 months
So yeah, you’re investing in a cement company that’s not distributing cement or dividends. Love that for us.
3. Business Model (WTF Do They Even Do?)
Star Cement manufactures:
- OPC, PPC, ARC, PCC & WSC (translate: lots of acronyms, all cement)
- Plants located in Meghalaya & Assam, supply chain advantage in NE
- Clinker capacity: 3.2 MTPA
- Grinding capacity: ~5.7 MTPA
Star’s edge? Logistics. Close proximity to limestone sources, and less competition in Northeast India. But now they’re expanding into Rajasthan, adding risk to their monopoly-zone comfort.
4. Financials Overview
| FY | Sales (₹ Cr) | OPM % | PAT (₹ Cr) | EPS (₹) |
|---|---|---|---|---|
| FY21 | 1,720 | 19% | 187 | 4.54 |
| FY22 | 2,222 | 16% | 247 | 6.11 |
| FY23 | 2,705 | 17% | 248 | 6.13 |
| FY24 | 2,911 | 19% | 295 | 7.30 |
| FY25 | 3,163 | 18% | 169 | 4.18 |
Flags Waving:
- FY25 PAT is down 43% despite revenue growth
- EPS crashed from ₹7.30 → ₹4.18
- Operating margins are stable, but depreciation + interest are eating profits
5. Valuation
Current Price: ₹226
EPS (TTM): ₹4.18
P/E: ~54.2 (Cement stocks are not supposed to be this expensive, unless you’re Shree Cement and born with a silver bag of clinker)
EduInvesting Fair Value Range:
- Base Case (15x P/E): ₹60
- Bull Case (25x P/E): ₹100
- Market’s Delusion Case (50x P/E): ₹210–₹230 (Oh wait… we’re there)
Conclusion: Valuation = Cement Bubble. Pop incoming?
6. What’s Cooking – News, Triggers, Drama
- Limestone Blocks: Declared preferred bidder in Assam & Rajasthan
- Capacity Addition: Lumshnong Clinker Line + Assam grinding unit now operational
- 7 MW AQC Boiler commissioned = sustainability checkbox ticked
- Promoter Exit Alert: Rajendra Chamaria resigns as MD + promoter holding dropped by 9.7%
- Zero Dividend Policy continues = CFO is either frugal or allergic to retail love
7. Balance Sheet
| Item | FY25 (₹ Cr) |
|---|---|
| Equity Capital | 40 |
| Reserves | 2,839 |
| Borrowings | 403 |
| Other Liabilities | 825 |
| Total Liabilities | 4,107 |
| Fixed Assets | 2,421 |
| CWIP | 220 |
| Cash & Current Assets | 1,464 |
Key Insights:
- Borrowings spiked from ₹147 Cr to ₹403 Cr → capex funding
- Net worth strong at ₹2,879 Cr, but capital inefficient
- Asset-heavy, cash-light model with expansion mode ON
8. Cash Flow – Sab Number Game Hai
| FY | CFO | CFI | CFF | Net Cash Flow |
|---|---|---|---|---|
| FY23 | ₹358 Cr | -₹255 Cr | ₹10 Cr | ₹114 Cr |
| FY24 | ₹490 Cr | -₹650 Cr | ₹86 Cr | -₹74 Cr |
| FY25 | ₹296 Cr | -₹529 Cr | ₹224 Cr | -₹8 Cr |
Diagnosis:
- Capex chewing up operating cash
- Raising debt + internal accruals to fund plant expansions
- FY25 net outflow of ₹8 Cr despite ₹224 Cr financing inflow
9. Ratios – Sexy or Stressy?
| Ratio | FY25 |
|---|---|
| ROCE | 8.38% |
| ROE | 6.04% |
| Debtor Days | 23 |
| Inventory Days | 314 |
| CCC | 173 days |
| P/E | 54.2 |
| P/B | 3.18 |
Hot Take:
- ROE and ROCE are below cement sector median
- CCC at 173 days = excess inventory or poor demand planning?
- P/E is fantasy, not fundamentals
10. P&L Breakdown – Show Me the Money
| FY25 (₹ Cr) | Amount |
|---|---|
| Sales | 3,163 |
| EBITDA | 579 |
| Depreciation | 332 |
| Interest | 32 |
| PBT | 226 |
| Tax | 57 |
| Net Profit | 169 |
EBITDA grew 4%, but depreciation doubled due to fresh capacity. That’s the story of shrinking net profit.
11. Peer Comparison
| Company | CMP (₹) | P/E | ROCE | Sales (Cr) | PAT (Cr) | OPM % |
|---|---|---|---|---|---|---|
| UltraTech | 12,498 | 60.2 | 10.9% | 75,955 | 6,117 | 16.5% |
| Ambuja | 597 | 35.5 | 10.5% | 35,044 | 4,142 | 17.0% |
| JK Cement | 6,498 | 63.2 | 13.9% | 11,879 | 794 | 17.1% |
| ACC | 1,970 | 16.0 | 17.4% | 21,762 | 2,307 | 14.1% |
| Star Cement | ₹226 | 54.2 | 8.4% | 3,163 | 169 | 18.3% |
Summary: Star’s P/E is at blue-chip cement levels, but RoCE is at government PSU levels. Big mismatch.
12. Miscellaneous – Shareholding, Promoters
| Category | Mar 2025 |
|---|---|
| Promoters | 57.67% |
| FIIs | 2.02% |
| DIIs | 5.17% |
| Public | 35.15% |
- Promoter holding dropped from 67% to 57% in 3 years
- No buybacks, no dividends, no clarity = market losing confidence
- Shareholder count: 65,091
- Promoters stepping down from key roles = soft red flag
13. EduInvesting Verdictâ„¢
Star Cement is building more plants than profits. Sure, they’re market leaders in the northeast—but that’s like being the best dosa vendor in Iceland. As they expand westward (Rajasthan), margin erosion and competition await.
Operationally okay. Financially just okay. Valuation? Not okay.
Unless capacity ramps lead to ROE crossing 12% and P/E cools down, it’s just cement dust with a fancy sticker.
Fair Value Range: ₹90–₹120 (based on FY25 EPS & sector average P/E)
Metadata
– Written by EduInvesting Research Team | July 19, 2025
– Tags: Star Cement, Cement Stocks, Northeast India, Plant Expansion, Valuation Bubble, Promoter Exit
