Investec has downgraded Star Cement to 'sell' rating despite the company delivering impressive third-quarter results for October-December 2025. According to reports from CNBC TV18, the Maharashtra-based cement maker reported revenue growth of 22.4% year-on-year and EBITDA growth of 94.3%, significantly beating street estimates. The company's operating margin improved by 800 basis points while net profit surged 8.3 times compared to the same period last year. However, MarketsMOjo has also assigned a Mojo Score of 42.0, reflecting a Sell rating, downgraded from a previous Hold rating on December 2, 2025.
Despite the strong financial performance, Star Cement's management has cut volume guidance for the full year ending March 2026, signaling potential demand softness ahead. As reported by CNBC TV18, this guidance reduction comes despite the company's ability to beat street estimates through price increases during the quarter. The management's cautious outlook on volumes has contributed to investor concerns about future performance.
The biggest concern for Investec is Star Cement's aggressive expansion plan into North India, which is largely funded by debt. According to the report, the company plans to add 9 million tonnes of grey cement capacity and 6 million tonnes of clinker capacity across projects, including the North India foray, at a cost of ₹4,800 crore (nearly $530 million). This expansion represents more than half of the company's total market capitalisation of nearly $980 million currently. MarketsMojo notes that the company's Market Cap Grade stands at 3, indicating a mid-tier market capitalisation relative to peers, reflecting analyst concerns about the expansion's financial sustainability.
Recent technical analysis reveals Star Cement's stock is experiencing a shift from bearish to mildly bearish momentum, with neutral RSI and mixed MACD signals pointing to a potential bottoming process rather than a clear breakout. As reported by MarketsMojo, the stock's current market price stands at ₹220.00, up from the previous close of ₹215.25, with intraday highs reaching ₹228.40 and lows at ₹210.15. The stock remains well below its 52-week high of ₹308.10 but comfortably above its 52-week low of ₹196.70, indicating a recovery phase within a broader downtrend. However, On-Balance Volume (OBV) indicators show no clear trend, suggesting volume is not currently confirming price movements, warranting caution among investors.
Despite recent challenges, Star Cement's long-term performance remains notably strong, with a three-year return of 93.92% significantly outpacing the Sensex's 38.25%, and a five-year return of 127.98% more than doubling the Sensex's 63.78%. However, recent performance shows some weakness, with the stock returning 0.99% over the past week, underperforming the Sensex's 2.94% gain, and declining 2.29% year-to-date compared to the Sensex's 1.36% fall. The current 52-week low for Star Cement is ₹197.79, and Investec believes the stock may fall to ₹179 in the next one year. MarketsMojo suggests investors should consider reviewing their exposure to Star Cement and exploring alternative opportunities within the sector that offer clearer technical and fundamental advantages.
