Star Cement Stock Rises 8% — Still a Buy or Time to Book Profits?

Spread love

StockEdge flags overbought signals and valuation concerns despite bullish momentum and strong fundamentals

By S JHA

MUMBAI, August 4, 2025 — Shares of Star Cement Ltd gained 8.5% on Monday to close the day at ₹264.75. The stock is trading at its 52-week high. It also is not trading at a premium PE valuation of 62.9, which is just behind the premium valuation commanded by stocks of Shree Cements.

While analysts claimed that shares of Star Cement Ltd are trading in overbought conditions, the stock vaulted again with over 8% jump. Gains have come amid rush among investors to partake growth of the cement sector in the country, which has seen major mergers an d acquisitions in the past.

“Star Cement Ltd., a leading player in the northeastern cement market, has surged 32.2% from its February lows, recently crossing the ₹250 mark,” said a note by StockEdge in its latest Telegram update, while urging investors to be cautious in the near term despite solid momentum.

“A dip towards ₹236–232 can’t be ruled out unless the stock sustains above ₹250,” the post noted, citing a Relative Strength Index (RSI) of 72.95, which signals overbought conditions and a potential bearish divergence.

The stock broke above a key resistance at ₹250, indicating technical strength. However, with RSI nearing 73, short-term correction pressure may emerge per StockEdge commentary.

The Kolkata-based firm noted that “July delivery volume stood at 59.3%, with steady spikes in total traded volumes, indicating accumulation by smart money. Momentum scores remain strong: 1M: 90/100; 3M: 83/100; and 6M: 87/100.”

“For the quarter ended March 2025, Star Cement reported: Net Sales: ₹1,052 crore; EBITDA (TTM): ₹262 crore; and PAT (TTM): ₹123 crore,” added StockEdge. The company posted healthy year-on-year growth across all financial metrics, it added.

However, its Price-to-Earnings ratio of over 62 stands significantly higher than peers like Ambuja Cements (PE: 34.76), even though it leads the pack in Return on Capital Employed (ROCE) at 16.51%.

“Star Cement plans to expand its capacity from 7.7 million tonnes to 12 MT by 2027, with a long-term target of 20 MT by 2030. Key focus areas include the Northeast, Rajasthan, and AAC block manufacturing. The company expects an additional ₹15 crore from new verticals by FY26,” added StockEdge.

Yet the stock advisory firm stated that “the company despite strong performance faces high dependence on subsidies (₹167 crore in FY25); Input cost pressures due to energy and logistics; and Execution risk on its Rajasthan expansion.”

While technical momentum remains intact and fundamentals are encouraging, StockEdge highlights the risks of entering at premium valuations. Investors are advised to watch for a price dip before fresh buying. “Better to wait for a correction before entering fresh positions,” the note concluded.

Disclaimer: This article makes no recommendation for buy or sell of shares of any company.

Follow The Raisina Hills on WhatsApp, Instagram, YouTube, Facebook, and LinkedIn