Shares of Star Cement (SCL) on BSE rose 11 per cent to Rs 119.95 in intra-day trade on Thursday amid heavy volumes. The stock of the cement and cement products company soared towards its 52-week high of Rs 124.10 on December 12, 2022.
02:08 PM; SCL was trading 5 per cent higher at Rs 113.70 on a multi-fold jump in its average trading volume. A combined 3.21 million shares, representing 0.79 per cent equity of SCL, changed hands on NSE and BSE. In comparison, the S&P BSE Sensex was down 0.01 per cent at 58,209.
SCL manufactures clinker and cement. At the consolidated level, apart from SCL’s 0.8-mmtpa clinker manufacturing unit and 5.00-mmtpa cement grinding unit, the group has additional facilities of 0.7-mmtpa cement grinding unit (under Megha Technical & Engineers Private Limited-MTEPL). 2.0-MMTPA clinker manufacturing unit (under Star Cement Meghalaya Limited-SCML) and 51 MW captive coal based power plant (under Meghalaya Power Limited-MPL).
Last week, rating agency ICRA retained SCL’s long-term rating at AA- and short-term rating at A1+. The outlook on the long-term rating has been revised from stable to positive.
Revised outlook factors in SCL’s expected increase in scale of operations and operating profit, and further strengthening its presence in the North East (NE) region on achieving significant progress in ongoing capital expenditure.
The company plans to increase its cement capacity to 4 million MTPA and clinker capacity to 3 million MTPA in a phased manner during FY 2024-FY 2026. Additionally, it is setting up a 23-MW Waste Heat Recovery System (WHRS), of which 12-MW capacity is expected to be commissioned in March 2023 and another 11-MW capacity will be commissioned in December 2024, which will aid in savings . In the cost of power, ICRA said in the rating rationale.
Long-term demand outlook remains positive given the government’s thrust on affordable housing and infrastructure sectors. Despite increase in input costs, the group has been able to maintain healthy operating profitability of 16.1 per cent in 9M FY23 (15.7 per cent in 9M FY2022), driven by cost optimization initiatives. Improvement in efficiency of operation of kilns, resulting in less energy usage, resulting in reduction in cost of power and fuel and to use the services of third party logistics providers, rating agency’s own fleet of vehicles for transportation Said control over freight cost by the use of.
“Star commands over 23 per cent market share in the fast-growing Northeast region and is likely to maintain its dominance in the medium term, given its established presence, strong brand recall, and no significant new additions in the region by peers. Reason. Factoring in Q3FY23 beat and lower OPEX/tonne, we raise our FY24- 25E EBITDA by 10 per cent and target price to Rs 125/share (earlier Rs 105), post half-yearly rollover”, Emkay Global Financial Services said its December quarter result is updated.
