Star Cement’s Target Price Maintained at INR 227 by ICICI Securities
ICICI Securities has downgraded its recommendation on Star Cement to “Hold” with a target price of INR 227, slightly below its current market price of INR 231.55. This downgrade follows a series of developments, including the announcement of UltraTech Cement’s acquisition of a non-controlling 8.69 percent stake in Star Cement at a price of INR 235 per share.
For the quarter ending 30 September 2024, Star Cement reported consolidated total income of INR 643.18 crore, a decrease of 14.51 percent from the previous quarter, but a growth of 8.82 percent compared to the same quarter in the previous year. The company posted a net profit of INR 5.67 crore for the quarter. Star Cement, a mid-cap company founded in 2001, has a market capitalization of INR 9,441.25 crore. The company’s products primarily include cement, clinker, and scrap, with its total outstanding shares standing at 40 crore as of September 30, 2024.
ICICI Securities noted that while Star Cement’s promoter group holds a substantial 66.47% stake in the company, the upcoming acquisition by UltraTech Cement, valued at INR 235 per share, is likely to lead to expectations of a potential merger or acquisition. The stake purchase comes as part of UltraTech’s strategy to expand its footprint in the cement sector. The deal prices Star Cement at an enterprise value of approximately USD 150 per tonne based on its current capacity of 7.7 million tonnes per annum (MTPA), which aligns closely with ICICI Securities’ target price of INR 227 per share. Given the uncertainty surrounding the merger and acquisition (M&A) activity and the recent increase in Star Cement’s stock price, ICICI Securities has downgraded its previous “Buy” rating to a “Hold” with a target price of INR 227.
