ICICI Securities Initiates Coverage of Star Cement, Sets Price Target at Rs 260

Star Cement Posts Strong Q4FY26 Performance, Maintains BUY Rating

Star Cement, a leading player in the Indian cement industry, has reported a robust Q4FY26 performance, with earnings before interest, taxes, depreciation, and amortization (EBITDA) growing 20% year-over-year (YoY) and 56% quarter-over-quarter (QoQ). This surpasses ICICI Securities' estimate by 7%. The company's strong volume growth, which increased by 13% in Q4 and 16% in FY26, was achieved without compromising on prices. In fact, the realization margin inched up 0.6% QoQ.

The company's ability to maintain a tight leash on costs and its industry-superior EBITDA per ton (t) of INR 1,818 (highest in the past 30 quarters) are testaments to its operational efficiency. Despite trimming FY27 and FY28 EBITDA estimates by 6% and 5% respectively, ICICI Securities continues to maintain a positive stance on the company due to its impressive volume growth, regional diversification story, and strong balance sheet. The company's FY26 net debt/EBITDA ratio stands at 0.2x, and its return on equity (RoE) range is 11-13%.

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The company's regional diversification story, which includes plans to set up a greenfield integrated capacity in North India and a grinding unit in Bihar, is expected to drive growth in the coming years. ICICI Securities values the core business at 11x FY28 EBITDA and assumes an NPV for its estimated incentive income. The research firm maintains a BUY rating on Star Cement with a revised target price of INR 260, down from INR 275 earlier.