ICICI Securities has maintained its 'BUY' rating on Star Cement with a revised target price of ₹251. Despite rising input costs and modest Q1 FY27 volume growth, the brokerage highlighted the company's strong profit margins and long-term expansion plans in North India. Investors are now watching for the impact of severe floods in Assam on the company's second-quarter performance.
ICICI Securities has reiterated its 'BUY' recommendation for Star Cement, though it adjusted the target price to ₹251 from the previous ₹260. The update comes as the company navigates a challenging environment characterized by rising operational costs and moderate volume growth.
In the first quarter of the 2027 fiscal year, Star Cement reported revenue of ₹942.89 crore and a net profit of ₹73.91 crore. While the company achieved a 4% year-on-year increase in sales volumes, this was offset by a 12% quarter-on-quarter jump in operating costs. Despite these pressures, Star Cement maintained an industry-leading EBITDA per tonne of ₹1,244. It is important to note that this figure was supported by ₹192 per tonne in government incentives, which played a crucial role in protecting the company’s profitability margins during the period.
Looking toward long-term growth, the company is actively working on expanding its footprint. A key part of this strategy is the planned 5 million tonnes per annum (MTPA) capacity expansion in North India, which is expected to be completed by FY29. This regional diversification is intended to reduce the company's dependency on its existing core markets.
However, the near-term outlook faces specific hurdles. ICICI Securities has lowered its EBITDA estimates for FY27 and FY28 by approximately 7% each. This revision reflects the expectation that high fuel and input costs may persist, potentially limiting profit margins. Furthermore, analysts have flagged the catastrophic floods in Assam as a significant risk. As Assam is a primary market for Star Cement, the weather-related disruptions are expected to negatively impact volume sales in the second quarter of the fiscal year.
For investors, the key monitorables will be how effectively the company manages its cost structure in the coming months and whether it can recover volume growth once the impact of the floods in Assam subsides. Additionally, stakeholders will likely track the progress of the North India expansion project, specifically focusing on whether the company can maintain a healthy balance sheet while funding this large investment.