Despite denying Ambuja's acquisition, Star Cement soars 26% so far in Dec

To fuel India's growth, Ambuja Cements has initiated capacity expansion projects of 20 MTPA, spanning every region of the country, over FY 2025-26

Star Cement share price hit an over three-month high of Rs 230.80 on the BSE on Friday. The stock of Star Cement rallied 5 per cent intraday trade, amid heavy volumes, in an otherwise weak market. With this, the stock of the cement and cements products company is quoting at its highest level since September 2, 2024. It had hit a 52-week high of Rs 255.95 on May 22, 2024. In comparison, the BSE Sensex was down 0.95 per cent at 80,516 at 11:19 am.

 

Thus far in the month of December, the stock price of Star Cement has surged 26 per cent after reports suggested that Adani-led Ambuja Cement may acquire the company. Star Cement, on its part, clarified on December 4 that the news item was speculative and the company was not engaged in any discussions in this regard. The news item is factually incorrect, Star Cement said. READ HERE 

 

  

Meanwhile, during the financial year 2023-24, Ambuja Cements successfully integrated Sanghi Industries and Asian Concretes and Cements into the Group's cement business. Further, the company announced the acquisition of My Home Group's 1.5 MTPA cement grinding unit in Tuticorin, Tamil Nadu in April 2024.

 

To fuel India's growth, Ambuja Cements initiated capacity expansion projects of 20 MTPA, spanning every region of the country, outlining the company's roadmap for 100 MTPA by FY 2025-26, IT said in its FY24 annual report.

 

Star Cement is engaged in the manufacturing and selling of cement clinker & cement. The manufacturing units are located at Lumshnong, Meghalaya; Guwahati, Assam; and Siliguri, West Bengal. The company is selling its product across northeastern and eastern states of India.

 

The Government of India prioritises North-east development due to its strategic location. Various initiatives have been launched, leading to improved health, education, infrastructure, and industrialisation. These efforts are aimed at uplift these regions and enhance their infrastructure and socio-economic prospects.

 

Meanwhile, the Union Cabinet has approved the Uttar Poorva Transformative Industrialisation Scheme (UNNATI), 2024 to foster industrial growth and employment generation in the northeast. The scheme's total cost is Rs 10,037 crore, covering 10 years with an additional 8 years for committed liabilities. All eligible Industrial Units are to commence their production or operation within 4 years from the grant of registration.

 

The aforesaid projects will help to increase cement demand in the Region which is likely to have positive impact on the companies operating in the region.

 

Cement demand in these regions is expected to remain stable due to government initiatives to boost infrastructure and housing development, and lower per capita cement consumption compared to the national average. Star Cement has guided for double-digit volume growth in H2FY25. Prices have improved in the North East and are expected to trend higher depending on the demand.

 

H2FY25 performance was influenced by election-related disruptions, increased clinker purchases, and a few one-off factors. However, demand is anticipated to improve as the busy construction season begins, with heightened cement requirements expected in the East and Northeast regions, driven by increased investments in infrastructure and affordable housing, according to analysts at Axis Securities.

 

With its upcoming capacity expansion, the company is well-positioned to capitalise on the rising demand in these areas. The brokerage projects that the company will achieve a compound annual growth rate (CAGR) of 11 per cent/13 per cent in volume and revenue and a 20 per cent CAGR in earnings before interest, tax, depreciation, and amortisation (EBITDA) over FY23-FY26E.