Star Cement hosted conference call on November 11, 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

Q2FY2025

Clinker production stood at 6.58 lac tonnes in Q2FY2025 as against 6.48 lac tonnes in Q2FY2024

Cement Production stood at 9.55 lac tonnes in Q2FY2025 as against 8.950 lac tonnes in Q2FY2024.

Cement sales of 9.62 lac tonnes in Q2FY2025 as against 8.96 lac tonnes in Q2FY2024.

Cliker sales was at 0.16 lac tones in Q2Fy2025.

Geography wise North East sales stood at 7.49 lac tones in Q2FY2024 as against 6.72 lac tonnes in Q2FY2024. Outside North East cement stood at 2.13 lac tonnes in Q2FY2025 as against 2.24 lac tonnes.

With respect to blend 10% was OPC and the rest was PPC.

Revenue for the quarter stood at Rs 642 cr in Q2FY2025 as against Rs 585 cr in Q2FY2024.

EBITDA stood at Rs 96 crore in Q2FY2025 as against Rs 104 crore in Q2FY2024.

PAT stood at Rs 6 crore in Q2Fy2025 as against Rs 41 crore in Q2FY2024. Decline in profit was due  to increase in depreciation on account of capitalization of new 2 MT capacity at Guwahati and clinker unit in Meghalaya.

Per ton EBITDA stood at Rs 995/ton as against Rs 1164 /ton in Q2FY2024.

Trade mix for the quarter stood at 85% and the balance was non trade.

Lead distance for the quarter was 218 kms as against 207 kms in Q1FY2025.

Premium mix stood at 106% in Q2 as against 9.1% in Q1Fy2025 of the trade sales.

Fuel mix: FSA coal contributed 55%; 18% was contributed by bio mass and the rest was spot and Nagaland coal.

Fuel cost for Q2FY2025 stood at Rs 1.5per K cal and the company expects fuel cost to remain same for Q3 and Q4 for FY2025.

H1FY2025

Revenue for H1FY2025 stood at Rs 1393 crore as against Rs 1346 crore in H1FY2024.

EBITDA stood at Rs 215 crore in H1FY2025 as against Rs 242 crore in H1FY2024.

PAT stood at Rs 37 crore as against Rs 134 crore in H1FY2024

EBITDA per ton stood at Rs 1007/ton as against Rs 1176/ton in H1FY2024.

SGST Benefit:

Total SGST benefit booked in Q2FY2024 was Rs 37 crore.

The company has recorded some part of new Meghalaya plant. However, due to some problem in line 3 clincker units benefit booked was low when compared to the expected.

The company expects Rs 50-60 crore GST benefit in the coming quarters.

CAPEX:

In H1FY2025, the company has incurred total CAPEX of RS 337 crore which was towards new clinker plant and WHRS.

In H2FY2025, the company expects to incur total CPAEX of Rs 377 crore of which major part will be towards Silchar plant and the balance towards new clinker plant and WHRS.

Earlier the CAPEX planned was around Rs 835 crore which has been reduced to Rs 720 crore for FY2025.

The company expects the Silchar plant to get commissioned by December 2025. The company expects ramp up by FY2027.

The company expects over all CAPEX of Rs 450 crore in Fy2026.

The company expects 6 MW WHRS to commence by November 2024 end and 6 MW WHRS by December 2024 end.

The AAC block unit of the company is expected to be commissioned by 15th of December 2024. The company will be receiving incentives for the AAC block unit as well.

Market: For the company North East market is the 7 states of North East and outside northeast is West Bengal and Bihar.

Capacity utilization: The company expects capacity utilization of around 70% in Q3 and around 85-90% in Q4FY2025. The company expects average capacity utilization of around 75% in FY2026.

Guwahati capacity utilization in Q2 stood at 77% as the company is using less of old line. Over all utilization between line 1 and line 2 is around 70%. By end of Q3 and Q4 the company expects full utilization of both the lines.

Outlook:

The company is facing some technical issue in line 3 of new clinker facility. The company expects EBITDA of Rs 230 crore in Q4FY2025.

The company expects volume growth in the range of 10-11% for the next 2 quarters of FY2025. Growth in North East will be higher and outside north east will be a bit lower.

Current prices in North East has increased by Rs 10 per bag when compared to Q2Fy2025. Prices in Bihar and West Bengal has not improved.

The current price per bag in North East is Rs 450 and the company expects Rs 15-20 per bag increase in prices in December2024.

The company expects government expenditure to come back from December 2024 which should aid demand going forward.

Depreciation will be higher in FY2025 due to capitalization of Guwahati plant in April and WHRS plant which will be capitalized in Q3FY2025. However, the company follows written down value method as such depreciation will be lower in FY2026.

The company do not expect pricing pressure in Q4FY2025.