Emkay Global’s latest research note on Star Cement reflects a confident stance with a BUY recommendation and a 12-month target price of Rs 265. The brokerage’s confidence is anchored in Star Cement’s commanding market share in the Northeast, sizable capacity expansion plans, and prudent capital management. While the stock has already surged 30% in the past two months, Emkay cautions that near-term upside may be limited, but robust demand, cost discipline, and geographic diversification create a compelling long-term narrative. Investors should note key financial levels and trigger points as Star cements its place in the fast-growing Indian infrastructure ecosystem.

Star Cement’s Strategic Expansion Blueprint

Market Share & Capacity Augmentation
Star Cement currently commands an impressive ~27% share of cement volumes and ~33% of installed capacity in the Northeast. With new Silchar and Jorhat grinding units slated for commissioning in FY26 and FY27, Star’s share is projected to reach ~29% for volumes and an astonishing ~45% for capacity by FY27. This plan reaffirms its status as the regional kingmaker.

Rajasthan Foray – Beyond Northeast Monopoly
In a calculated move to shed its purely regional tag, Star Cement is charting a greenfield expansion in Rajasthan. The company has already secured limestone deposits through government auctions, positioning itself to double overall capacity from 8mtpa to approximately 18mtpa within five years. This expansion marks an inflection point, enabling the brand to tap North India’s burgeoning demand.

Financial Fortitude: Balance Sheet Strength

Cash Flow Resilience Amid Capex Aggression
Estimated cumulative operating cash flows of Rs25bn over FY26-FY28 against a planned capex outflow of Rs18bn ensure Star Cement will remain net-cash positive by FY27. This fiscal discipline equips the company to fund substantial expansions without excessive leverage, balancing internal accruals with targeted equity fundraising.

Key Financial Metrics and Investor Triggers
Here’s a concise look at Star Cement’s projected financials—investors should track these numbers for direction:

Stock Performance, Levels, and Valuation

Share Price Action and Relative Strength
Star Cement’s shares have surged more than 30% in the last two months, currently trading near Rs273. Its 52-week high is Rs309 and low is Rs172—levels worth monitoring for momentum investors.

Valuation Insights
Emkay notes that the stock’s valuation is now at ~11x EV/EBITDA for FY27E, close to its +1SD over five-year mean. The price-to-earnings ratio will normalize as earnings ramp up on new capacity, presenting medium-term re-rating potential.

Capital Efficiency and Return Metrics

RoE and RoIC Growth Outlook
Star Cement’s return on equity is projected to recover from a low of 6% in FY25 to 13-14% through FY27-FY28, buoyed by EBITDA margin expansion and efficient capital deployment. Return on invested capital is forecast to climb to nearly 20% by FY28, underlying best-in-class operational effectiveness.

Dividend and Cash Flow Yields
Dividend payouts are expected to be subdued post-FY26 as expansion becomes the primary capital allocation priority, with free cash flows turning robustly positive from FY27 onward.

Key Catalysts & Risks for Investors

Growth Levers in Northeast and Rajasthan
Sustained infrastructure spending by central and state governments in the Northeast remains a powerful tailwind, supporting a 10% CAGR in regional cement demand. The near absence of new competitors in the region over the next four years bodes well for price discipline and profitability.

Execution and Market Risks
Aggressive expansion, while promising, carries execution risks—including project delays, regulatory hurdles, and cost overruns. Additionally, the recent rally could render the stock vulnerable to profit-taking and short-term volatility, especially as multiples trade at a premium.

Investment Levels and Emkay’s Target

Current Market Price
Rs273 per share
12-Month Target Price
Rs265 per share
Suggested Entry Band for Fresh Exposure
Accumulation advised on dips toward Rs250–260
Stop-Loss Level for Tactical** Investors
Rs220 recommended as technical support

Bottomline: Long-Term Value Play Amid Near-Term Rich Valuation

Emkay Global’s endorsement comes with a clear-eyed view: Star Cement is well-positioned for secular growth and margin expansion, but investors should brace for near-term volatility following the sharp price surge. The company’s disciplined capital allocation, market share fortification, and thoughtful geographic expansion make it a compelling buy for long-term, institutional, and sophisticated investors. Those with tactical interest may consider adding on minor corrections, keeping strategic levels in mind for profitable participation.