Key highlights from Star Cement Ltd (STARCEMENT) Q3 FY24 Earnings Concall
- Cement Production and Sales Performance
- Clinker production 7.37 lakh tons in Q324 vs 7.39 lakh tons in Q323.
- Cement production 9.82 lakh tons in Q324 vs 9.22 lakh tons in Q323.
- Cement production increased by 7% year-on-year.
- Sold 9.6 lakh tons of cement and 0.3 lakh tons of clinker in Q324.
- Cement sales increased 7% to 9.6 lakh tons vs 9.08 lakh tons in Q323.
- Northeast cement sales were 7.32 lakh tons vs 6.62 lakh tons in Q323.
- Outside northeast cement sales were 2.38 lakh tons vs 2.45 lakh tons.
- Financial Performance
- Total revenue was INR 655 crore in Q324 vs INR 629 crore in Q323.
- EBITDA was INR 153 crore in Q324 vs INR 120 crore in Q323.
- Net profit was INR 74 crore vs INR 53 crore in Q323.
- EBITDA per ton was INR 1,576 in Q324 vs INR 1,324 in Q323.
- Capacity Expansion
- Guwahati grinding unit commissioning in March 2023.
- SGST incentives of INR 150-160 cr annually from Guwahati grinding unit.
- Tax benefit with 17% rate at new Guwahati plant.
- Lumshnong clinker unit commissioning in March 2023.
- Lower clinker heat rate and power cost at new Lumshnong unit.
- Silchar grinding unit commissioning in Aug-Sep 2023.
- Minor delays vs original timelines due to equipment delivery.
- Capex Update
- Guwahati: INR 330 cr spent till Dec’22, INR 55 cr in Q423 vs INR 430 cr budget.
- Lumshnong: INR 850 cr spent till Dec’22, INR 200 cr in Q423 and Q124 vs INR 1300 cr budget.
- Silchar: INR 20 cr spent on land purchase so far vs revised INR 450 cr budget.
- Volume Growth Outlook
- 9M volume growth at 9% vs 13-14% full year target.
- Q4 volume growth expected at 5-7% for industry, 8-10% for company.
- Next year targeting 18-20% volume growth with Guwahati capacity.
- Pricing Trends
- Northeast prices increased INR 7 in Q3 vs Q2.
- Outside northeast prices dropped INR 15-20 in Bihar and Bengal.
- Premium cement share at 6.5% vs 4.5% in Q3FY23.
- Premium cement growth at 47% in Q3.
- Some pressure likely in Q4 with INR 5 decline expected.
- Managing Clinker Requirement
- Have 1.8 lakh ton clinker inventory currently.
- Producing at full capacity to build stock.
- New grinding unit will ramp up gradually from March.
- New clinker unit starts in April.
- Inventory and production to meet requirement during transition.
- Expansion Plans
- Targeting 20 million tonne capacity in next 7-8 years.
- Evaluating greenfield mines in south and north India.
- Likely organic expansion by setting up plants at new mines.
- Small acquisitions not feasible currently in the market.
- Siliguri Plant Utilization
- Capacity utilization was 47-48% in Q3.
- Expected to improve to 52% in Q4.
- Constrained by clinker availability currently.
- Will improve with new clinker unit commissioned.
- Targeting above 60% utilization post clinker expansion
- AAC Blocks Update
- Land work completed for Guwahati AAC blocks plant.
- Machinery orders placed, project on track.
- Expected to commission by Aug 2024.
- 25% margins and 20% RoCE targeted.
- Assam Opportunity
- Total Northeast cement market size is 13 million metric tonnes, with Assam accounting for over 7.5 million tonnes.
- Star Cement currently sells 1.8 million tonnes in Assam, targeting over 2.6 million tonnes by FY2026.
- With 30-35% market share, there is room to grow without high risks of oversupply.