Star Cement hosted conference call on August 12, 2024. In the conference call the company was represented by Mr Tushar Bhajanka-Deputy Managing Director and Mr Manoj Agarwal-CFO.

Key takeaways of the call

Volume

Clinker production stood at 6.86 lac tonnes in Q1FY2025 as against 7.27 lac tonnes in Q1FY2024

Cement Production stood at 11.8 lac tonnes in Q1FY2025 as against 11.80 lac tonnes in Q1FY2024.

Cement sales of 11.54 lac tonnes in Q1FY2025 as against 11.54 lac tonnes in Q1FY2024.

Cliker sales was negligible in Q1Fy2025 against 0.11 lac tones in Q1FY2024.

Geography wise North East cement sales stood at 8.5 lac tones in Q1FY2024 as against 8.36 lac tonnes in Q1FY2024. Outside North East cement sales stood at 3.04 lac tonnes in Q1FY2025 as against 3.29 lac tonnes.

Volume growth for the company was around 3% YoY in North east and declined by 8% YoY outside North east. Volumes were impacted due to election and monsoon.

Q1FY2025

Revenue for the quarter stood at Rs 751 cr in Q1FY2025 as against Rs 760 cr in Q1FY2024.

PBIDT stood at Rs 118 crore in Q1FY2025 as against Rs 138 crore in Q1FY2024. Decline in PBIDTA was mainly due to purchase of clinker from outside to the tune of Rs 28 crore in Q1FY2025.

PAT stood at Rs 31 crore as against Rs 93 crore in Q1FY2024. Decline in net profit was mainly due to higher depreciation on account of capitalization of 3 million ton clinker plant in Meghalaya.

Trade sales stood at 84% of the total sales in Q1FY2025 and Non trade stood at 16% in Q1FY2025.

Premium contribution stood at 9.2% of the trade sales in Q1FY2025.

Lead distance stood at 207 kms.

Fuel Mix: Fuel mix for the quarter constituted FCA coal 60%,Bio Mass 20%, Nagarjuna coal 20%.

Fuel cost per Kilo cal stood at Rs 1.5 per Kilo cal in Q1FY2025. The company do not expect significant decline or upside movement in fuel cost.

Expansion:

The company plans to set up a grinding unit in Silchar. The same is expected to be commissioned in October 2025. The company has acquired land for the same.

The company also plans to set up another 2 MT grinding unit in Johrat Assam which is expected to be commissioned in October 2026.

WHRS capacity is expected to be commissioned in 2 phases of 6 MW each. The first phase will be commissioned in October 2024.

ACC block unit is expected to be commissioned in October 2024. The same is expected to contribute revenue to the tune of Rs 60-70 crore per annum and is expected to EBITDA margin of around 20%.

Incentive:

The company received Rs 10.9 crore incentives in Q1FY2025 and expects to receive around Rs 40 crore in Q2FY2025 and further increase subsequent quarters based on sales volume. The company accounts incentives on accrued basis. There is a maximum time lag of 3 months on receipt of incentives once booked.

The company will receive around Rs 300/ ton SGST benefit for clinker plant for 3MT which is commissioned in April 2024.

The company expects clinker subsidy to the tune of Rs 13-14 crore per qurter from Q3Fy2025.

CAPEX:

The company plans to incur a CAPEX of Rs 850 crore in Fy2025 of which Rs 110 crore is incurred in Q1FY2025.

The company plans to incu CAPEX of around Rs 670 crore in FY2026.

Debt: the company has debt to the tune of Rs 240 crore as on june 30,2024.

TAX rate: Tax rate stood at  around 20.7% for Q1FY2025 and is expected to be around 22% levels for the rest of the year.

Prices:

Prices have declined by Rs 12-13 per bag post june quarter in east.

Outlook:

The company expects volume growth to be subdued in Q2FY2025. The company expects volume growth of 15% YoY  for FY 2025 as against earlier guided range of 18-20%.

The company expects EBITDA per ton of Rs 1500/ ton going forward. This is aided by Rs 250/ ton clinker cost reduction as it will manufactured in house. Rs 300 /ton SGST benefit and also there will be reduction in manpower cost.