ICICI Securities has maintained its BUY recommendation on Star Cement with a 12-month target price of Rs 250, implying an upside potential of nearly 16% from the current market price of Rs 216. The brokerage remains constructive on the company’s long-term growth trajectory, supported by superior volume expansion, improving capacity utilization, and an ambitious capacity expansion roadmap. While near-term profitability may face pressure from elevated input costs linked to geopolitical disruptions in West Asia, Star Cement’s strong operational efficiency, dominant North-East market position, and disciplined cost management strategy are expected to sustain healthy earnings growth. The company’s expansion plans could nearly double capacity by FY29, reinforcing its leadership position in eastern and northern India.

ICICI Securities Reaffirms BUY Call on Star Cement

Star Cement continues to remain one of the most compelling regional cement growth stories in India, according to ICICI Securities. The brokerage has reiterated its BUY recommendation on the stock while assigning a target price of Rs 250 based on a valuation multiple of 10x FY28E EV/EBITDA.

The company currently commands a dominant market share of approximately 27% in the North-East region and has been steadily expanding its footprint across eastern states including West Bengal and Bihar. With installed cement capacity of 9.7 million tonnes per annum (MTPA) and clinker capacity of 6.1 MTPA, Star Cement is positioning itself for another phase of aggressive expansion.

Strong Q4FY26 Performance Highlights Operational Momentum

The March quarter demonstrated Star Cement's ability to outperform industry growth trends.

Key quarterly highlights include:

The quarter was characterized by robust volume expansion and lower operating costs, which more than compensated for marginal pressure on cement realizations. Revenue growth was primarily volume-driven, while profitability improved through operating leverage and cost efficiencies.

Volume Growth Expected to Outpace Industry Trends

The most important pillar of the investment thesis remains Star Cement's superior volume growth outlook.

The company delivered volume growth of 16.7% during FY26 and management expects another 10-12% increase in FY27. ICICI Securities believes Star Cement can continue outperforming industry growth rates due to improving utilization of recently commissioned capacities and strong demand trends in its key operating regions.

The brokerage estimates volume CAGR of approximately 11% between FY26 and FY28. Total dispatch volumes are projected to increase from 5.5 million tonnes in FY26 to nearly 6.7 million tonnes by FY28.

Massive Capacity Expansion Pipeline Could Transform Scale

Perhaps the most significant long-term catalyst is Star Cement's ambitious expansion strategy.

The company is executing multiple projects simultaneously:

• Bihar grinding unit of approximately 2 MTPA expected by Q1-Q2 FY29.
• Rajasthan project comprising clinker and grinding capacities expected by H1FY29.
• Haryana grinding facility targeted for H1FY29 commissioning.
• Jorhat grinding unit in Assam with 2 MTPA capacity.
• New clinker line at Umrangso, Assam.

Upon completion, total cement capacity could rise from the current 9.7 MTPA to nearly 18.7 MTPA by FY29, effectively doubling the company's production base.

Management has guided FY27 capital expenditure of Rs 600-700 crore, followed by approximately Rs 1,500 crore during FY28 as construction activities accelerate.

Cost Headwinds Persist but Structural Efficiency Story Remains Intact

The key challenge facing the company in the near term is cost inflation arising from geopolitical developments in West Asia.

Management estimates a temporary cost impact of approximately Rs 250-300 per tonne during H1FY27, primarily due to:

• Higher packaging material costs.
• Coal logistics disruptions.
• Railway rake shortages.
• Domestic coal supply constraints.

However, Star Cement remains relatively insulated from imported fuel volatility because of its heavy reliance on domestic fuel sources and biomass usage.

The company continues investing in several structural cost-saving initiatives including:

• Greater renewable energy usage.
• Waste Heat Recovery Systems (WHRS).
• Captive coal agreements.
• Freight optimization measures.
• Strategically located grinding units.

These initiatives are expected to support long-term profitability despite temporary inflationary pressures.

Healthy EBITDA Profile Supports Earnings Visibility

Star Cement has significantly improved its profitability profile over the past year.

EBITDA per tonne surged to Rs 1,703 during FY26 compared with Rs 1,229 in FY25, representing an impressive increase of nearly 39%.

While management expects some moderation due to higher costs, it continues to guide for EBITDA per tonne of approximately Rs 1,500-1,700 during FY27 and FY28.

ICICI Securities forecasts EBITDA per tonne of around Rs 1,671 by FY28, indicating that profitability should remain well above historical averages despite temporary cost pressures.

Financial Outlook Remains Robust

The brokerage expects steady earnings expansion over the next two years.

Between FY26 and FY28, ICICI Securities expects:

• Revenue CAGR of approximately 11%.
• EBITDA CAGR of approximately 9%.
• PAT CAGR of approximately 9%.

These projections suggest sustained earnings visibility despite an increasingly competitive industry landscape.

Investment View and Target Levels

ICICI Securities maintains a positive long-term outlook on Star Cement despite short-term margin pressures.

The brokerage believes the company is well-positioned to capitalize on infrastructure development and housing demand across eastern and north-eastern India.

Key investment levels:

While risks include slower cement demand, delays in expansion projects, commodity inflation, and competitive intensity, Star Cement's dominant regional franchise, disciplined expansion strategy, and industry-leading volume growth outlook continue to support the investment case. Investors seeking exposure to India's long-term infrastructure and construction cycle may find the stock attractive at current levels.