Star Cement Volume Recovery Better Than Expected

Star Cement’s Q4 results were in line with our estimates. EBITDA came in at Rs1.25bn vs. estimated Rs1.29bn and EBITDA/ton stood at Rs1,426 vs. estimated Rs1,475. North-East (NE) markets contributed 74% of sales volumes vs. 75%/71% in Q4FY19/Q3FY20. Key positives: 1) Volume growth of 4.2% yoy led by higher volumes in the East and NE markets; 2) Realization growth of 5% qoq as cement prices improved in Q4. Key negatives: Higher employee and energy costs. Management believes that pent-up demand and lower inventory with dealers have led to demand recovery after easing of lockdowns. May’20 volumes were 90% of last year’s volumes and Jun’20 volumes are almost same as the last year.