Star Cement Q3 Results Review - Robust Quarter: Dolat Capital

Dolat Capital Report

Star Cement Ltd. reported volume, revenue in line, however realisation, Ebitda, Ebitda/tonne, adjusted profit afte tax above estimates.

Star Cement posted 11.7% YoY growth in revenue (up 4.3% QoQ) to Rs 6.2 billion led by led by up 3.9% YoY in volume to 0.91 million tonne (up 1.9% QoQ) coupled with up 7.5% YoY in realisation/tonne to Rs 6,823 (up 2.3% QoQ).

Ebitda/adjusted profit after tax reported up 60.6% / up 20.7% YoY to Rs 1.1 billion/ Rs 529 million.

We expect 18.4%/ 25.3%/ 2.3% revenue/ Ebitda/adjusted profit after tax compound annual growth rate over FY22-25E led by 16.5%/ 10.0%/ 25.0% volume growth and 3.5% / 0.0%/ 0.0% realisation growth in FY23E/ FY24E/ FY25E.

We broadly maintain our revenue estimates for FY23E/ FY24E/ FY25E. However, we increase our Ebitda/adjusted profit after tax estimates by 7.9%/ 11.2%, 5.4%/ 5.4% and 6.3%/ 9.9% for FY23E, FY24E and FY25E respectively factoring lower opex.

With commencement of its two million tonnes per annum grinding unit at Siliguri, Wes Bengal in Jan-21, Star Cement's total cement grinding capacity increased by 32.6% to 5.7 mtpa which will support additional volume growth and reduce its cost of sales for outside north east region. With this expansion, the company will be able to participate in ongoing growth of Eastern market (particularly WB and Bihar).

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