Star Cement - Capacity Expansion to Drive Growth; Outlook Remains Positive: Axis Securities

Axis Securities Report

Star Cement Ltd. reported consolidated revenue of Rs 2,221 crore in FY22, registering a robust growth of 29% YoY. This was primarily on account of the new capacity ramp-up of it Siliguri Grinding unit which was commercialized in FY21.

The company posted an Ebitda of Rs 345 crore, up 4% YoY. Ebitda growth was impacted by elevated input costs during the year. Star Cement’s volume grew by 29% YoY to 3.40 million tonnes per annum led by higher demand and new capacity ramp-up during the year.

The capacity utilization of the Siliguri Grinding unit stood at an encouraging 70% in the later part of FY22, significantly up from 32% in Q1 FY22. While continuing with its strategy of focusing on the Northeast market where it’s a market leader, the company undertook several marketing initiatives in FY22 to augment its sales from the new grinding unit.

Consequently, the East India region’s contribution to total sales increased to 25% from 20% in FY21.

On the capex front, Star Cement is setting up a 3 mtpa clinker unit at the Meghalaya facility along with a 12 mega watt waste heat recovery system plant.

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