SBI Securities has issued a buy recommendation for Star Cement with a target price of ₹277, representing significant upside potential from the current market price of ₹216.70. According to reports from The Hindu BusinessLine, the brokerage values the stock at 11.7x of its rolling one-year forward EV/EBITDA, citing strong growth prospects and expansion plans despite near-term margin pressures.
Star Cement demonstrated robust operational metrics in Q4FY26, with volumes growing 9.7% year-on-year to 1.6 million tonnes and blended realisations improving 1.7% to ₹7,253 per tonne. As reported by The Hindu BusinessLine, EBITDA margin expanded to 26.8%, driven by cost efficiencies and operating leverage from higher volumes. The company's healthy execution reflects volume-led growth and margin expansion across key operational parameters.
The company maintains its capex guidance of ₹600-700 crore for FY27E and ₹1,500 crore for FY28E, according to The Hindu BusinessLine. While FY27E capex will be funded through internal accruals and cash reserves, FY28E capex will be funded through a mix of internal accruals and debt. Management targets 10-12% volume growth for FY27 and expects EBITDA per tonne in the range of ₹1,500-1,700 over the next three years, compared to ₹1,819 in FY26.
The company faces near-term headwinds with management expecting ₹250-300 per tonne impact on operating costs in H1FY27 due to the West Asia crisis affecting packing bags and fuel costs, as reported by The Hindu BusinessLine. Normalisation is expected from Q3FY27. Despite sluggish cement demand in April due to elections in Assam and West Bengal, pick-up was witnessed in May. The stock currently trades at FY27E/28E EV/EBITDA of 9.3x/8.7x respectively.
