Star Cement Q1FY27: consolidated PAT falls 25% YoY to ₹74 Cr as OPM compresses to ~21%
PAT -24.71% YoY · revenue +3.39% · margins compressing
₹942.89 Cr
+3.39% YoY
₹73.91 Cr
-24.71% YoY
7.77%
-3pp YoY
₹1.85
Star Cement's consolidated revenue rose a modest 3.4% YoY to ₹942.9 Cr but fell 19.7% QoQ from Q4FY26's ₹1,173.6 Cr. Consolidated PAT for the period came in at ₹73.9 Cr (₹74.7 Cr attributable to shareholders), down 24.7% YoY from ₹98.2 Cr and 49.7% QoQ from ₹147.0 Cr; basic EPS fell to ₹1.85 from ₹2.44 a year ago and ₹3.66 last quarter. Neither this quarter nor the year-ago quarter carried exceptional items, so the YoY decline is a clean, unadjusted comparison — no adjusted-vs-reported gap to reconcile.
Q1 FY-2027 vs prior quarters
The compression sits squarely on operating margin: OPM fell to roughly 20.6% from 25.0% YoY and 26.4% QoQ, and NPM fell to 7.8% from 10.7% YoY, as power-and-fuel costs rose to ₹152.0 Cr from ₹141.4 Cr a year earlier even as revenue grew only 3.4%. This lines up with what management told the Street on the Q4FY26 call: a temporary ₹250-300 Cr fuel-cost hit across Q1-Q2 FY27 from supply-chain disruptions, only partly offset by price increases, with normalisation expected by Q2. On that specific cost-guidance dimension the quarter met what was flagged. The filing carries no volume disclosure, so the separately guided 10-12% FY27 cement volume growth target can't be checked against this statement.
The stock went into the print at ₹198.38, down 3.2% over the past month of trading.
What the summary numbers don't show
Company adopted concessional tax rate under Section 115BAA from Apr 1, 2026 — tax expense not comparable to prior periods
Standalone PAT ₹23.8 Cr, roughly flat YoY (₹24.2 Cr) but down sharply QoQ from ₹67.6 Cr
Management projects a 10-12% volume growth for FY27 on cement sales. The company plans significant capex, with INR600-700 crores estimated for FY27 and INR1,500 crores for FY28, primarily for new grinding units in Haryana and Bihar, and clinker plants in Rajasthan and Assam. They anticipate a temporary increase in fuel
— This quarter: met
Pre-print brokerage coverage (Business Standard) had flagged sector-wide Q1FY27 margin pressure from roughly ₹250-300/ton cost inflation tied to West Asia-linked fuel costs, with normalisation expected around June/Q2 — directionally consistent with this print, though no company-specific consensus PAT figure could be found to call a precise beat or miss. This quarter's other corporate developments — a rejected promoter-reclassification application (Jul 16) and being named preferred bidder for an Assam mining lease (Jun 24) — have no direct P&L linkage this period. No management press release accompanying the filing was available to quote.
W1
Q2FY27 OPM trajectory — management guided fuel-cost pressure (₹250-300 Cr hit across Q1-Q2 FY27) to normalise by Q2/June; watch for recovery toward the 25-26% FY26 run-rate
W2
FY27 volume growth vs the 10-12% guide — not disclosed in this filing; check the Aug 10, 2026 earnings call
W3
Progress on ₹600-700 Cr FY27 capex (Haryana/Bihar grinding units, Rajasthan/Assam clinker plants) and its funding/debt impact
Source in ₹ Lakhs, converted to Cr. No exceptional items in Q1FY27 or the year-ago Q1FY26 (clean YoY); Q4FY26 base carried a ₹5.80 Cr consolidated exceptional item (labour-code provision). Consolidated PAT for the period (₹73.91 Cr) splits to ₹74.72 Cr shareholders / ₹(0.81) Cr NCI. Company adopted concessional tax rate under Sec 115BAA from Apr 1, 2026, so tax expense isn't comparable to prior periods (Note 3).
The ₹73.9 Crore Profit That Rests on Subsidies—and Near-Term Doubt
Revenue grew just 3.4%, but profit fell 24.7%. That gap reveals the real story: subsidy dependency masking structural margin pressure, and guidance cut mid-call on volumes and incentives. The street has repriced accordingly.
₹73.9 Cr
-24.7% YoY
₹40 Cr
one-time Q1 drag; masks underlying cost pressure
The 3.4% revenue growth promised stability. The 24.7% profit decline told the real story—and that gap defines the quarter. Dig into it and the pattern is clear: a one-time ₹40 crore GST subsidy hit in Q1, fuel costs spiking 17% quarter-on-quarter, packing material costs inflated by war-driven commodity volatility, and a structural policy change in Assam cutting incentives by ₹30 crore for the full year. Strip out those subsidies and core earnings are under stress, not growing. The guidance cut mid-call confirms management lost confidence in FY27 recovery.
The profit breakdown: where the collapse came from
Operating margin of 20.6% implies EBITDA of roughly ₹194 crore—down from ₹230 crore a year prior, a 15.7% decline. Most was driven by: fuel costs jumping from ₹1.33/kg (Q4 FY26) to ₹1.55/kg (Q1 FY27), a 17% spike (management cited power plant demand diverting Coal India rakes); packing material costs elevated due to crude oil volatility and war impacts on international supply; and the ₹40 crore GST subsidy hit. Adjust for the GST hit and EBITDA sits around ₹234 crore—still down roughly 2% organic, not the headline 16% slump. Net profit of ₹73.9 crore reflects both EBITDA pressure and the fact that ₹115 crore of FY27 incentive subsidies (13–15% of EBITDA) are now baked into the earnings base. Without them, profitability would be single-digit on a margin basis. That's the structural weakness: the company lacks pricing power to offset cost inflation.
Volume growth 6.5% YoY to 13.02 MT; targeting 8–9% full year
Supported (though Q2 saw -12% decline in July due to floods; H2 recovery assumed)
Fuel costs spiked to ₹1.55/kg from ₹1.33/kg due to coal supply disruption
Supported; management cited power plant demand surge diverting FSA coal
EBITDA/ton compressed from ₹1,774 to ₹1,497 due to fuel, packing, subsidy
Supported by delivered result (OPM 20.6% vs prior year higher margins)
Excluding ₹40 Cr GST subsidy hit, EBITDA was resilient
Partial; adjusted EBITDA ~₹234 Cr still down ~2% YoY—organic growth stalled, not resilient
Assam incentive reduction ₹30 Cr from new 12-year payout structure
Supported; Assam shifted from performance-based to amortized payout
Rajasthan EC expected Oct 2026, work start mid-Oct/Nov, commissioning Q1 FY29
Supported; timeline contingent on approval clearances
Clinker sales flat-to-negative due to external imports, not market share loss
Contradicted; clinker sales down 30% YoY (0.52 MT vs 0.74 MT)—denial of share loss unconvincing
What changed on this call
FY27 cement volume guidance downgraded from 10–12% to 8–9% due to Q1 miss and Q2 flood impact
Assam subsidy policy shifted from performance-based to 12-year amortization; FY27 incentive cut to ₹115 Cr from ₹145 Cr expected
FY27 capex guided at ₹500 Cr (implied downgrade from ₹600–700 Cr prior guidance); FY28 remains ₹1,500 Cr
Clinker outlook negative: FY27 expected flat-to-minus-5–10% (prior guidance implied growth)
Q3–Q4 recovery expected from pent-up demand post-monsoon; Q2 guided softer
The bull-bear ledger
Outside Northeast volumes surging +21% YoY; geographic diversification working (though from smaller base)
Rajasthan capex quantified (₹2.6–2.9 Cr over 2 years for 3.3 MT clinker + 3 MT grinding); EC approval imminent
Cost initiatives identified: Silchar railway siding (Nov 2026), wagon tippler, EV trials; ₹60–70 Cr annual savings targeted
Reported profit rests on ₹115 Cr subsidy; policy already cut ₹30 Cr YoY; further cuts risk profitability collapse
Clinker sales down 30% YoY; management denies share loss but offers no credible response to external imports or Dalmia competition
Fuel and packing costs remain elevated and volatile; pricing power absent (prices flat despite cost spike); margins structurally squeezed
Northeast 67% of cement sales; Q1 hampered by Assam elections, Q2 by monsoon floods (-12% volume in July); macro-dependent recovery uncertain
Risks, ranked by how much they should concern a holder
Subsidy policy and structural earnings dependency
HighFY27 earnings rest on ₹115 Cr incentives (13–15% of EBITDA). Assam government already cut ₹30 Cr this year. Further policy changes would crater profitability; without subsidy, NPM would fall below 2%. Company lacks pricing power to offset.
Cost inflation and margin compression
HighFuel costs up 17% QoQ, packing material elevated (war/crude related), GST subsidy changes. PAT fell 24.7% despite revenue +3.4%. Cost initiatives are unproven; Q2 expected softer due to shutdown costs and persistent fuel/packing pressure.
Geographic concentration and weather volatility
HighNortheast 67% of cement sales; Assam is 60–70% of that. Q1 Assam elections impacted sales; Q2 monsoon floods caused -12% volume decline in July. Another macro disruption could push FY27 volumes negative.
Competitive clinker loss and market share erosion
HighClinker sales down 30% YoY (0.52 MT vs 0.74 MT). Management blames external imports but denial of share loss is unconvincing. Dalmia Bharat capacity ramp in Northeast adds competitive pressure; company has no articulated response.
Capex execution and balance sheet stress
MediumRajasthan project ₹2.6–2.9 Cr over 2 years is major capital commitment. Management confident on 1.5–1.6x debt/EBITDA but Q1 earnings miss suggests lower earnings power than modeled. No QIP planned near-term; execution risk material.
Q2–Q3 recovery narrative unproven
MediumManagement betting on pent-up demand release post-monsoon and Q3–Q4 double-digit growth to salvage 8–9% full-year target. With July volume down 12% and cost pressures persistent, recovery timing and scale are uncertain.
How the street is reading this
The market's verdict arrived fast: a 1.5% loss on day 1, which held firm (fading only slightly to −0.98% by day 3 and −1.19% by day 5). That's a rejection, not a temporary pullback. The stock closed pre-results at ₹201.96 and has since pulled back further to ₹200.06 as of mid-August. More tellingly, it's now 25.79% below its all-time high, trading below its 20-day, 50-day, and 200-day moving averages—a clear technical breakdown signal. RSI sits at 41.6 (neutral-to-oversold), suggesting the sell-off has priced in weakness but hasn't yet hit panic.
Ownership tells a steady story: promoters hold 58.10% (fractionally up 0.02 pp quarter-on-quarter), FII 2.29% (unchanged), DII 2.38% (down 0.27 pp). Foreign and domestic institutional flows are minimal and flat. Selling came from retail and non-institutional sources. No blocky insider transactions have signalled that promoters or insiders believe the recovery narrative. Promoter stability suggests long-term capex confidence, but the absence of new institutional buying suggests skeptics outnumber believers on near-term fundamentals.
The price action and technical breakdown together signal that investors are pricing in earnings pressure (higher costs, subsidy risk, weak macro) before any capex-driven recovery. The 25% drawdown from ATH is material but not a capitulation; whether it's cheap or fairly valued hinges on two things: (1) whether subsidy policy holds and (2) whether Rajasthan capex delivers margin expansion by late FY28. Until one of those catalysts solidifies, the stock is likely to remain range-bound or weaker.
The debate
1 · Q2 FY27 earnings and volume trend
July volume already down 12% due to Assam floods. If volumes remain weak in coming months, the 8–9% full-year target is in jeopardy. Watch for: (a) actual cement volume (Northeast vs. outside Northeast split), (b) fuel cost trajectory (expected ₹1.45/kg in Q2, further easing thereafter), (c) packing material cost normalization, (d) EBITDA/ton vs. ₹1,400–1,500 guidance.
2 · Rajasthan EC approval and capex start
Environmental clearance expected Oct 2026; capex work to start mid-Oct/Nov 2026. This is a binary event: on-time approval signals execution confidence and unlocks capex-story credibility. Delay or conditions would reset the recovery narrative.
3 · Assam subsidy policy clarity and receivables
Total outstanding incentive ₹130 Cr; FY27 guidance ₹115 Cr. Track: (a) actual payout vs. guidance, (b) any further policy circulars from Assam government, (c) collection delays under 12-year amortization structure. This is a make-or-break item for earnings credibility.
4 · Competitive response to clinker loss
Clinker sales down 30% YoY; external imports cited. Watch for: (a) management commentary on market share defense, (b) any M&A or JV to bolster clinker position, (c) Dalmia and competitors' capacity ramp and pricing moves.
This quarter is a step-change down in near-term earnings, not a cyclical miss. The margin collapse is real, driven by cost inflation and subsidy dependency. Guidance cut signals caution. For long-term investors, the Rajasthan capex story remains intact and diversification is progressing, but the near-term (2–3 quarters) is weighted toward headwinds: macro softness, cost pressures, subsidy policy risk. The stock's repricing from ₹269 (ATH) to ₹200 is warranted given earnings uncertainty.
The single number to track from here is cement volume growth—both absolute (targeting 8–9% FY27) and by geography (Northeast vs. outside Northeast). If the 12% July decline in Northeast reverses sharply in coming months, the recovery narrative holds and the capex story stays credible. If it doesn't, the company risks falling short of even the downgraded guidance. Paired with Q2 cost actuals and subsidy policy updates, volume will tell you whether the stock has bottomed or has further to fall. Hold for now; buy only on new evidence of demand recovery or subsidy policy stabilization.
Guidance cut, margin crushed, Q2 trajectory bleaker
The verdict, the claims that held up, the sharpest analyst exchanges, and the risks — the earnings call, decoded from the transcript.
Hold
confidence 5/10
Grade C
Missed volume growth expectations, cut FY27 guidance mid-call, incentive subsidy halved
Negative
next 1–2 quarters
Cautiously Optimistic
multi-year
Q1 delivered soft results (3.4% revenue growth, -24.7% PAT) with significant margin compression. Management has cut FY27 guidance (volumes 8-9% vs 10-12%, incentives ₹115 Cr vs ₹145 Cr expected) and faces near-term headwinds: Q2 volumes down 12% in July, fuel costs spiked 17% QoQ, and subsidy policy change cost ₹30 Cr. Long-term capex is quantified (Rajasthan ₹2.6 Cr+) but recovery depends on macro reopening and execution risk remains high.
₹902 Cr
Revenue · +6.5% YoY₹74 Cr
Reported PAT · −24.5% YoYCompressing
Margins · vs guidance: MixedDid the claims hold up?
EBITDA ₹203 Cr, down from ₹230 Cr due to cost pressures
OVERSTATEDDelivered result OPM 20.6% on ₹942.9 Cr implies EBITDA ~₹194 Cr; call figure ₹203 Cr vs actual
Volume growth 6.5% YoY; targeting 8-9% full year
METQ1 volume +6.5% but Q2 saw 12% decline in July; implies 2H recovery needed
EBITDA/ton ₹1,497, compressed from ₹1,774 due to fuel, packing, subsidy
METDelivered result NPM 7.8%, OPM 20.6% consistent with margin compression narrative
Excluding ₹40 Cr GST subsidy hit, EBITDA was resilient
PartialWithout that ₹40 Cr, EBITDA would be ~₹243-244 Cr; still -5.6% vs prior year
Rajasthan plant 18-20 months from Nov 2026, start Q4 FY28/Q1 FY29
METEC expected Oct 2026, work to start mid-Oct/Nov; timeline contingent on approvals
Incentive reduction of ₹30 Cr from new Assam payout structure
METTotal outstanding ₹130 Cr; ₹115 Cr FY27 expectation vs ₹145 Cr prior = ₹30 Cr reduction
Earnings quality
What changed since the last call
FY27 volume growth guidance
DowngradeRevised from 10-12% (prior FY26 call guidance) to 8-9% due to Q1 miss and Q2 flood impact
FY27 cement volume growth outlook
DowngradeIndustry Northeast growth expected 7% (from prior 8-10% range); company targeting 8-9% (from prior 10-12%)
Clinker sales trajectory
DowngradeExpected to be flat or -5-10% in FY27 vs FY26; prior guidance implied growth. Outside clinker import pressure cited.
FY27 incentive guidance
DowngradeReduced to ₹115 Cr from expected ₹145 Cr due to Assam government's new payout structure (12-year amortization). ₹30 Cr hit.
Capex timing FY27
NeutralFY27 capex maintained ₹500 Cr but implied cut from prior ₹600-700 Cr guidance. Major spend deferred to FY28+ (₹1,500 Cr+)
The Q&A
Analysts pressed on volume miss, margin compression, and competitor gains. Management acknowledged Q1-Q2 challenge but deflected to macro factors (elections, floods, GST change, war impacts on packing costs). On Northeast market share, MD denied loss to Dalmia but provided no counter-evidence. Q&A was moderately tense; analysts skeptical of recovery narrative.
Volume guidance revision — Shravan Shah, Dolat Capital
AnsweredQ2 flooded, limited stride expected. From Q3-Q4 double-digit growth hoped. Full year revised to 8-9% from 11-12%.
Clinker sales outlook — Shravan Shah, Dolat Capital
AnsweredClinker FY27 will be stagnant or degrade 5-10% vs FY26 due to clinker import from outside Northeast.
Fuel cost trajectory — Shravan Shah, Dolat Capital
AnsweredFuel ₹1.55 in Q1, expected ₹1.45 in Q2, further reduction in Q3-Q4. ₹1,500-1,600 EBITDA/ton doable over full year but ₹1,400 expected in Q2 due to shutdown cost.
Pricing and demand outlook — Jyoti Gupta, Ashika Institutional
AnsweredDue to lack of demand in Q1-Q2 and floods, pent-up demand expected in Q3-Q4. Currently muted. Price broadly stable in both Northeast and outside Northeast.
Rajasthan plant timeline — Jyoti Gupta, Ashika Institutional
AnsweredEC by Sep-Oct 2026, work to start mid-Oct/Nov. 18-20 months from Nov means Q1 FY29 or Q4 FY28 commissioning.
Northeast market share and competition — Rajesh Ravi, HDFC Securities
PartialNot competition. April elections in Assam (60-70% of Northeast market) impacted sales. Monsoon also plays role. Market share not lost.
Assam concentration risk — Navin Sahadeo, ICICI Securities
PartialQ2 and July volume degrowth ~12% due to Assam floods. Marginal growth in Aug expected. Recovery expected in Sep (no GST change this year vs -28% to -18% last year).
Grinding unit capex redirection — Navin Sahadeo, ICICI Securities
DodgedComparing West Bengal and Bihar as alternatives. If policy favorable, may redirect Bihar capex to West Bengal. More clarity after policy announcement mid-August.
Rajasthan incentive status — Navin Sahadeo, ICICI Securities
PartialStandard approved package for Nimbol clinker plant received. Capital subsidy + SGST benefit. Exact quantum not in hand but will be shared in next presentation.
Assam incentive change and payout delay — Navin Sahadeo, ICICI Securities
AnsweredTotal ₹794 Cr incentive expected. Currently ₹130 Cr outstanding. Assam changed payout from performance-based to 12-year amortization, reducing FY27 expectation to ₹115 Cr from ₹145 Cr.
Price behavior post-Q1 — Harsh Mittal, Emkay Global
AnsweredPrices broadly flat. Q1 to now, ~₹2-3 increase. Flat because demand low; no price reduction due to cost pressure. Expect price increase once demand opens.
Cost per ton reduction Q2 — Harsh Mittal, Emkay Global
PartialFuel may reduce to ₹1.45. Packing costs remain high (war/crude related). Multiple cost initiatives ongoing: railway siding Sep-Nov, EVs intro, wagon tippler. Expect ₹60-70 Cr savings in Q2 from one-off donations/incentive reduction.
Non-cement revenue guidance — Harsh Mittal, Emkay Global
PartialNot EBITDA increase, revenue estimate. Demand sluggish. Increasing RMC plants, focusing on ASC. Should reach ₹150 Cr by Q4 on ARR basis.
Guidance
FY27 cement volume growth 8-9% (revised from 10-12%)
MediumQ1 actual +6.5%, Q2 headwind expected, H2 recovery dependent on monsoon abatement and pent-up demand release
EBITDA/ton ₹1,500-1,600 for full year; Q2 estimated ₹1,400
LowFuel expected to ease ₹1.45 in Q2, further in Q3-Q4. Packing costs remain elevated. Shutdown cost in Q2. Very dependent on fuel prices and subsidy.
FY27 ₹500 Cr (implied cut from prior ₹600-700 Cr); FY28 ₹1,500 Cr
HighRajasthan ₹2.6-2.9 Cr over 2 years for 3.3 MT clinker + 3 MT grinding. West Bengal grinding unit (2 MT) under review pending policy.
Risks the call surfaced
Geographic concentration
HighNortheast 67% of cement sales. Q1 elections in Assam (60-70% of Northeast) impacted sales. Q2 July volume -12% due to Assam floods. Risk of further negative YoY in Q2.
Subsidy structural dependency
HighFY27 guidance of ₹115 Cr subsidy critical to profitability (13-15% of EBITDA). Assam changed payout from performance-based to 12-year amortization, cutting ₹30 Cr this year. Further policy change could materially impact earnings.
Margin compression and cost control
HighQ1 PAT down 24.7% YoY despite revenue +3.4%. Fuel cost ₹1.55/kg (+17% QoQ). Packing costs elevated due to war/crude oil volatility. Management has no pricing power (prices flat despite cost pressures). Subsidy offsets margin pressure artificially.
Competitive market share loss
HighClinker sales -30% YoY (0.52 MT vs 0.74 MT). MD attributes to external clinker import into Northeast. No clear evidence of market share defense. Dalmia Bharat capacity expansion in Northeast ongoing. Pricing power absent (prices flat despite cost spike).
Capex execution and balance sheet risk
MediumFY27 ₹500 Cr + FY28 ₹1.5 Cr + Rajasthan ₹2.6-2.9 Cr = massive capex. QIP plan deferred due to current balance sheet stress. Company confident it can manage at 1.5-1.6x debt EBITDA but Q1 results (PAT -24.7%) suggest earnings power weaker than expected. No clear funding plan articulated.
Management
Score 6/10. Transparent on challenges but defensive on root causes. Candid on cost pressures and guidance cuts but attributes primarily to macro (elections, floods, GST) rather than operational issues. Detailed on metrics but vague on competitive dynamics. Missed Q1 guidance. Cut FY27 volume guidance mid-call (10-12% → 8-9%). Incentive subsidy halved due to policy change (not operational). Capex remains on track but FY27 ramp slowed. Track record mixed.
1 · Q3 FY27 (Oct-Dec 2026)
Monsoon eases, pent-up demand release expected, cost initiatives materialize (Silchar railway siding by Nov)
2 · Aug-Sep 2026
West Bengal industrial policy announcement; potential grinding capex redirection from Bihar
3 · Oct 2026
Rajasthan EC approval; capex work to start mid-Oct/Nov on ₹2.6+ Cr project
Long-term capex is quantified (Rajasthan ₹2.6 Cr+) but recovery depends on macro reopening and execution risk remains high.