Star Cement (STARCEMENT)

FairStock Score: 39/100 — MIXED

Score breakdown: P/E: 1/3 · ROCE: 0/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Sales growth of 22.43% and latest quarter net profit of ₹74 Cr on ₹880 Cr sales show near-term momentum.
• Conservative balance sheet with debt/equity of 0.21 and a Piotroski F-Score of 7/9.
• Promoter holding of 57.62% aligns the controlling owners with minority shareholders.
• Profit growth of 772.85% and PEG of 0.06 could indicate improving earnings power if the turnaround sustains.

Concerns

• ROE of 6.10% and ROCE of 8.39% are low for the price being paid.
• At P/E of 23.23 and P/B of 5.73, there is little margin of safety.
• Profit growth of 772.85% is likely from a low base and may not be sustainable for a cyclical cement business.
• Dividend yield of 0.93% is modest, and the FairStock Score of 48/100 signals mixed fundamentals.

AI Analysis

At ₹235.12, Star Cement is an interesting study in how a recovering cyclical can masquerade as a growth stock. The topline grew 22.43%, profits jumped 772.85%, and the latest quarter delivered ₹880 Cr sales with ₹74 Cr net profit. But I don't buy earnings in a rearview mirror; I buy earning power I can trust. A 23.23 P/E and 5.73 P/B for a cement business earning only 6.10% on equity and 8.39% on capital is not my idea of a bargain. Graham would ask: where is the margin of safety? For every ₹100 I put in, I get ₹6.10 of return on their book equity, yet I'm paying ₹235.12 for book value of ₹41.02. That's a rich price for ordinary returns. The balance sheet is sound — debt/equity 0.21 — and Piotroski score of 7/9 suggests the quality of the reported improvement is passable. Promoter holding at 57.62% means my interests are aligned with owners. So the business is not unhealthy. The question is valuation. The 772.85% profit growth flatters the PEG ratio at 0.06, but that number is nearly meaningless if the jump is from a low base or the cement cycle turning down next year. I would rather own a wonderful business with a fair price than a fair cyclical at a wonderful price. Cement is a cyclical, commodity product. Without strong pricing power and durable returns above capital cost, high sales growth will not create shareholder wealth. Star Cement is worth watching, but at ₹235.12, with low ROE and high P/B, I will pass. I wait for a lower price or a proven track record of higher returns on capital.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer