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Star Cement Ltd Q3 FY24 Earnings Conference Call Insights

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.
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