Star Cement mulls buyback; stock up 10%

Star Cement's current market capitalisation stood at around Rs 5,300 crore, and its net worth at around Rs 1,800 crore including reserves & surplus.

Star Cement shares rallied 10 percent intraday on June 18 after the company planned to propose share buyback in the forthcoming board meeting later this week.

The stock climbed 25 percent in the last three months. It was quoting at Rs 127.50, up to Rs 10.65, or 9.11 percent on the BSE at 12:41 hours IST.

The north-eastern cement company informed exchanges that the meeting of the board of directors is scheduled on June 21 to consider and approve a proposal for buy-back of equity shares, the constitution of buy-back committee and appointment of intermediaries.

Star Cement's current market capitalisation stood at around Rs 5,300 crore, and its net worth at around Rs 1,800 crore including reserves and surplus.

"We have a capex of Rs 350 crore Siliguri (West Bengal), of which Rs 100 crore already spent and the balance Rs 250 crore will be spent in the next three quarters. And the balance would be used towards share buyback," he added.

He said the company is not planning to raise any debt and will fund capex through accruals.

If the company goes for a buyback of 10 percent of its net worth then it needs board's approval, but if it is 25 percent of total paid-up capital, then it needs shareholders’ approval.

"Board will decide whether we will go for a 10 percent or 25 percent of the network as buyback limit," Gupta said.

The company gets 70 percent of its sales from Northeast India and expects the second half of FY20 to be better compared to H1FY20, he added. "We will maintain EBITDA per tonne at around Rs 1,600-1,700 and hope to grow the top line by 15 percent in FY20."

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