Star Cement hosted conference call on February08, 2024. In the conference call the company was represented by Mr Tushar Bhajanka-Deputy Managing Director, Mr Vinit Kumar Tiwari-CEO and Mr Manoj Agarwal-CFO.

Key takeaways of the call

Volume

Clinker production stood at 7.37 lac tonnes in Q3FY2024 as against 7.39 lac tonnes in Q3FY2023

Cement Production stood at 9.82 lac tonnes in Q3FY2024 as against 9.22 lac tonnes in Q3FY2023.

Cement sales of 9.67 lac tonnes in Q3FY2024 as against 9.08 lac tonnes in Q3FY2023.

Cliker sales stood at .03 lac tonnes in Q3FY2024 against nil in corresponding previous year.

Geography wise North East sales stood at 7.32 lac tones in Q3FY2024 as against 6.62 lac tonnes in Q3FY2023. Outside North East sales stood at 2.38 lac tonnes in Q3FY2024 as against 2.45 lac tonnes.

Revenue for the quarter stood at Rs 655 cr in Q3FY2024 as against Rs629cr in Q3FY2023.

EBITDA per ton stood at Rs 1576/ton as against Rs1324/ ton.

Trade sales stood at 87% of the total sales in Q3FY2024 and Non trade stood at 13% in Q3FY2024.

Premium contribution stood at 6.5% of the trade sales as against 4.5% in Q3FY2023 up 47% YoY.

Lead distance stood at 215 kms in Q3FY2024.

Power and fuel:

Power cost per K cal stood at Rs 1.75/ K cal and expects to remain around 1.7/ for Q4FY2024

Expansion: The company is setting up a 3 million ton clinker plant which is expected to be commissioned by Mar 31, 2024.

The company is setting up a 2 million ton grinding unit in Assam which is expected to be commissioned by March 01,2024.

Delays in commissioning of clinker unit and grinding unit in Guwahati are on account of more time in trial runs and due to delays in delay of delivery of machinery.

Also the company plans to set up a grinding unit in Silchar. The same is expected to be commissioned in Aug –September of calendar year 2025.

Expansion outside North East: The company is looking out for mines in Rajasthan and in South India . Once it finalizes on mines will go ahead with the expansion.

The company plans to take the total capacity to 20 MT from the current 10 MT by FY2030. Most of it will be organic growth however the company is open to acquire mines through inorganic route.

The same will be funded through both internal accruals and from outside sources .

AAC project: The AAC project is expected to be commissioned in August of calendar year 2024. The AAC business has margins of 25% and has ROCE of 20%.

Incentive:

The company has input credit which the company will utilize in 2-2.5 months starting march 2024.

The company will receive SGST benefit of Rs 150-200 cr (per year)for next 5-7 years for grinding unit of Guwahati.

The company will receive around Rs 300/ ton SGST benefit for clinker plant for 3MT which is new and will be commissioned by March 31, 2024.

In addition, the Guwahati grinding unit will have tax benefit as it will be at lower tax of 17%.

CAPEX:

For the clinker plant, the company has expended around Rs 850 crore till December 2023, the company will be expending around Rs 200 crore in Q4FY2024 and Rs 200 crore in Q1FY2025. In total the capex for clinker unit is expected to be around Rs 1250 crore against Rs 1300 crore budgeted earlier.

For Guwahati unit, the company has incurred capex of around Rs 330 crore and will incur another Rs 55 crore in Q4 FY2024. The total CAPEX of Guwahati plant has declined from Rs 430 crore to Rs 385 crore.

For  Silchar  plant the company has incurred Rs 20 crore towards land acquisition.

Prices:

Prices improved by Rs 7 per bag in  North east while it declined by Rs 15-20 per bag in Bengal and Bihar when compared to Q2FY2024.

Prices have remained more or less stable since exit.

Cash: The company had cash balance of Rs 115 crore as on Dec31,2023. The company will raise debt of Rs 150 crore in Q4FY2024 and Rs 100 crore in Q1FY2025 which has to be paid back in subsequent quarters.

Outlook:

The company expects volume growth of 8-10% YoY in Q4FY2024.

The company expects volume growth of 18-20% YoY in FY2025.

The company majority of the sales is through trade  and there is lot of opportunities in institutional sales in the North east region as hydro power projects and lot of big bridges are being constructed.The company also plans to gain market share from existing players.