Star Cement cuts non-cement margin guidance by 60% and boosts capex to ₹1,500 cr
The company slashed its target for the non-cement business within three months of setting it, and plans to spend ₹500 cr more on expansion than previously estimated.
— 3 earlier stories on Star Cement Ltd. →What's new
- Non-cement business margin guidance cut from 20% to 7-8% with no fundamental cause cited.
- FY28 capex raised to ₹1,500 cr from a prior estimate of ₹1,000 cr.
- FY27 subsidy income set to fall ₹40-50 cr, with coal and West Asia costs pressuring margins.
Why this matters
Star Cement is revising core profitability assumptions for a new business line at the exact moment it is doubling down on capital spending. The margin cut removes a key part of the growth thesis for the non-cement segment, while the capex hike increases the balance-sheet commitment to capacity expansion. The gap between lower profitability and higher spending is the central tension for the stock.
What we're watching
- Whether the Rajasthan and Bihar plants commission on schedule in early FY29.
- How coal and fuel costs evolve as the West Asia crisis persists.
- Management's next explanation for the non-cement margin collapse.
The full read
Star Cement just told investors its new non-cement business will make 7-8 cents on the dollar, not 20 cents. That is a 60% cut to a margin target set only three months ago. The company offered no explanation for the change. At the same time, it plans to spend ₹1,500 crore on expansion in FY28, a 50% increase over the prior ₹1,000 crore estimate. The additional capital is for Rajasthan and Bihar plants still on track for early FY29. Management also flagged a ₹40-50 crore drop in subsidy income for FY27 and ongoing cost pressure from coal and the West Asia crisis. The numbers paint a difficult picture: lower profitability assumptions for a new venture, rising fuel costs, and a much bigger capital commitment. The initial non-cement thesis has collapsed. The expansion bet just got more expensive.
Questions answered
- How much did Star Cement cut its non-cement margin target?
- Management lowered guidance to 7-8% from a 20% target set just three months earlier. The filing gives no reason for the reversal, which implies the initial assumption was overly optimistic.
- What changed in the company's capital spending plans?
- FY28 capex is now estimated at ₹1,500 crore, up 50% from the prior ₹1,000 crore plan. The increase is tied to the ongoing expansion into Rajasthan and Bihar, which remains on track for commissioning in early FY29.
- What are the near-term cost pressures?
- The company flagged a ₹40-50 crore decline in government subsidy income for FY27. It also cited ongoing headwinds from coal inflation and the West Asia crisis, though it expects these to normalize later.
- What does this mean for the Rajasthan and Bihar expansion?
- The multi-year capacity expansion remains on track with commissioning targeted for early FY29. The significant increase in capex suggests the projects are moving forward but also that the capital outlay is larger than initially planned.
Star Cement Ltd.
Latest quarter · Mar 2026
Strength & growth
Story so far
All notes on STARCEMENT →- 26 May 2026 · 5:10 PM IST Star Cement cuts non-cement margin guidance by 60% and boosts capex to ₹1,500 cr
- today Star Cement wins preferred bid for Assam limestone block with 207.8 MT reserves
- 28d ago Star Cement plans ₹600-700 cr capex this year as subsidies drop ₹40-50 cr
- 33d ago Star Cement swings to ₹130 cr profit as board reshuffles top brass