/** blogpostTitle: Star Cement FY26: record EBITDA, near term cost headwinds, and a clear capacity roadmap */

Star Cement FY26: record EBITDA, near term cost headwinds, and a clear capacity roadmap

Star Cement closed Q4 FY26 with a strong finish and delivered its highest ever annual EBITDA in FY26. For the quarter ended March 2026, revenue from sale of cement and clinker stood at INR 1,174 crore, up 11% year-on-year. EBITDA was INR 318 crore, up 19%, and profit after tax came in at INR 147 crore, up 20%. On a per ton basis, EBITDA improved to INR 1,838 per ton in Q4 FY26 from INR 1,748 per ton a year ago.

For the full year FY26, revenue from sale of cement and clinker rose to INR 3,776 crore from INR 3,163 crore in FY25. EBITDA increased sharply to INR 944 crore versus INR 589 crore, while PAT climbed to INR 390 crore from INR 169 crore. Management described this as the highest ever annual EBITDA and anchored the discussion around scale-up plans that aim to take the company from a North-East leader into a broader East and North India player.

Q4 execution: volumes, realizations, and better cost control

Q4 FY26 cement and clinker sales were 17.33 lakh tons, up 13% YoY. The company also highlighted that the quarter included clinker sales of 114 KT. On the demand side, management noted that Q4 saw robust volume growth despite escalation in the West Asia crisis. On the pricing side, the investor presentation stated cement realizations grew 4.7% YoY in Q4.

The company’s mix remained anchored in the North-East, but growth outside the core market stood out. The presentation said total cement sales volume grew 10% YoY in Q4, with North-East sales up 2% while rest of East grew 32%. Trade sales formed 78% of volumes and non-trade 22%. Product mix continued to be skewed towards blended cement, with PPC at 82% and OPC at 18% in Q4.

Operationally, Star Cement emphasized utilization improvements in key grinding assets. In Q4, utilization of the new grinding unit in Guwahati was 95%, while Siliguri grinding unit utilization improved to 86%. The newly commissioned Cachar Grinding Unit, commissioned on 19 February 2026, was also highlighted as a contributor to meeting high Q4 demand.

Financial summary

Cost levers: logistics normalization and an improved power mix

Logistics costs were relatively stable and improved sequentially. Logistics cost per ton stood at INR 1,255 in Q4 FY26 versus INR 1,293 in Q3 FY26, with the company attributing QoQ rationalization to the fact that Q3 had been impacted by logistics disruption due to strikes. Lead distance was 220 km in Q4 FY26 versus 212 km in Q3.

A structural positive in the quarter was the increased role of WHRS. Fuel cost per ton fell to INR 975 in Q4 FY26 from INR 1,022 in Q3, and fuel cost per GCV declined to INR 1.2 from INR 1.3. The company said this was supported by a high share of coal sourcing from FSA and rising WHRS contribution. Green energy share improved to 33.8% in Q4 FY26 from 32.5% in Q3, while WHRS share rose to 27.4%.

However, management flagged that coal availability was impacted, and fuel costs may rise in Q1 FY27. On the conference call, the managing director explained that rakes were being diverted to thermal power plants, creating supply tightness. Management estimated a near-term cost increase in coal of about INR 0.10 to INR 0.15 per GCV, with the CFO indicating that it could be INR 0.15 to INR 0.20 depending on how diesel prices and auction prices evolve.

FY27 starts with mixed signals: growth guidance but cost and subsidy headwinds

Management provided explicit volume growth guidance for FY27. The company expects cement volume growth of about 10% to 12% in the coming year, based on FY26 cement volumes. Management also indicated that clinker sales are not expected to grow meaningfully, and focus is shifting towards optimizing clinker realizations rather than driving clinker volumes.

The near-term risk discussion was shaped by two factors. First, cost inflation tied to the West Asia crisis. In the FY26 presentation, the company noted escalation in packing bags and diesel costs, along with rail route restrictions affecting rake availability in NFR, which led to fuel cost escalations and impacted coal availability. In the call, management estimated an overall cost impact of about INR 250 to INR 300, driven mainly by packing bags and fuel sourcing constraints. The company also spoke about partial price increases, indicating that North-East pricing improved by about INR 6 to INR 7 per bag and outside North-East by about INR 10 per bag.

Second, subsidy normalization. When asked about incentives, management guided that overall subsidies in FY27 would reduce. The CFO stated that subsidy in FY26 was INR 184 crore, and for FY27 the company should estimate around INR 145 to INR 150 crore. This reduction is material given how important state subsidies have been historically for operations in the region.

Capacity expansion: Bihar, Rajasthan, Haryana and a longer runway beyond the North-East

The strategic centerpiece of the presentation is a roadmap to almost double capacities by FY29. As of FY26, Star Cement had 9.7 MTPA grinding capacity and 6.1 MTPA clinker capacity. The company’s roadmap shows cement capacity rising to 11.7 MTPA by FY28 and 16.7 MTPA by FY29. Clinker capacity remains 6.1 MTPA through FY28 and increases to 9.4 MTPA by FY29.

The planned projects are set out clearly:

• Bihar grinding unit: 2.0 MTPA cement capacity planned for FY28.
• Nimbol integrated unit, Rajasthan: 3.3 MTPA clinker and 3.0 MTPA cement planned for FY29.
• Haryana grinding unit: 2.0 MTPA cement planned for FY29.

The presentation also stated that North-East expansion will be evaluated based on demand and business conditions, while groundwork is being prepared in Umrangso and Jorhat to keep the company ready for a scale-up.

The planned investment outflow table indicates total project capex outlay of INR 3,650 crore, split as INR 600 crore in FY27, INR 1,400 crore in FY28, and INR 1,200 crore in FY29. Management stated an intent to fund expansion through internal accruals and debt financing, while targeting net debt to EBITDA below 1.5x.

On the call, management provided updated near-term capex guidance, indicating FY27 capex could be INR 600 to INR 700 crore and FY28 could be around INR 1,500 crore, depending on timing of approvals and land acquisition. Management indicated it had applied for environmental clearances and permissions and was pursuing land acquisition in Nimbol, Haryana, and Bihar, with an expectation that approvals and land acquisition could be completed around October.

ESG targets: quantified and time-bound

The company’s ESG slide provided time-bound targets with measurable milestones.

• Green energy: target to reach 60% share by FY28, with Q4 FY26 at 33.8%. The company noted it is evaluating renewable energy options such as rooftop and behind-the-meter solar, group captive structures, and wind power.
• TSR: target of 20% by FY27, stated as achieved and planned to be maintained.
• Water positivity: target of 2x water positive by FY28, with current status at 1.60x supported by a new reservoir at Lumshnong and community rainwater harvesting initiatives.
• Diversity and inclusion: target of 12% women in the permanent workforce by FY27. The company stated headcount increased from 168 in July 2023 to 246 in March 2026, raising the share from 8% to about 11%.

Building materials: early traction and higher ambition for FY27

Star Cement’s building materials initiative moved from commissioning to early scale-up. The presentation noted the plant was commissioned on 2 June 2025 and generated revenue of INR 43 crore in FY26. Management added on the call that Q4 revenue from AAC block and other products was about INR 17 crore.

More importantly, management set a bigger ambition for FY27: a revenue target of about INR 150 crore including AAC, RMC and allied products. The company indicated an initial margin target of 7% to 8% as it focuses on building the market first and expanding margins gradually.

Competitive intensity: acknowledged, but timing uncertain

Investors asked about potential entry of larger cement players into the North-East. Management said it could take around 3 to 4 years for new competition to enter meaningfully. It also acknowledged that once entrants arrive, there could be pressure because the market is relatively small, and competition can influence pricing for a period. At the same time, management suggested that rationality tends to prevail over time, and highlighted Star Cement’s strong trade penetration as a competitive advantage.

Takeaways

Star Cement’s FY26 performance shows clear operating leverage. Higher volumes, better realizations, and improved energy mix translated into record annual profitability. The Q4 performance also demonstrated the benefit of incremental capacity, with the Cachar grinding unit helping meet peak demand.

FY27, however, starts with known headwinds. Management expects near-term pressure from cost inflation linked to packing materials, diesel, and coal sourcing constraints, and also expects subsidy income to decline versus FY26. Against this, the company is maintaining volume growth guidance and continuing to invest for the next phase of scale.

The strategic arc is now defined by execution: land acquisition, approvals, and capex delivery across Bihar, Rajasthan, and Haryana. If these milestones remain on track, the company’s roadmap to 16.7 MTPA cement capacity by FY29 becomes the main lever for the next growth cycle.