Current Rating and Its Significance
MarketsMOJO’s 'Sell' rating for Star Cement Ltd. indicates a cautious stance towards the stock, suggesting that investors may want to consider reducing exposure or avoiding new purchases at this time. This rating is derived from a comprehensive evaluation of four key parameters: quality, valuation, financial trend, and technicals. The rating was revised on 02 December 2025, reflecting a significant change in the company’s overall assessment. Yet, it is crucial to understand that the current financial data and market performance as of 07 February 2026 provide the most relevant context for investment decisions.
Quality Assessment: Average Operational Performance
As of 07 February 2026, Star Cement Ltd. holds an average quality grade. The company’s operating profit has grown at an annualised rate of 9.71% over the past five years, which indicates moderate growth but falls short of the robust expansion seen in some peers within the cement sector. This steady yet unspectacular growth suggests that while the company maintains operational stability, it lacks the dynamism to command a higher quality rating. Investors should note that consistent but modest profit growth may limit the stock’s appeal for those seeking aggressive capital appreciation.
Valuation: Premium Pricing Amidst Expensive Metrics
Currently, Star Cement Ltd. is considered expensive relative to its historical and peer valuations. The company’s Return on Capital Employed (ROCE) stands at 12.4%, which is respectable but does not fully justify the premium valuation. The Enterprise Value to Capital Employed (EV/CE) ratio is 2.6, signalling that the stock trades at a premium compared to its peers’ average historical multiples. Despite this, the stock’s Price/Earnings to Growth (PEG) ratio is 0.5, reflecting a favourable relationship between price and earnings growth. This dichotomy suggests that while the stock appears pricey on traditional valuation metrics, its earnings growth potential may offer some offsetting value for investors willing to look beyond headline multiples.
Financial Trend: Positive Profit Growth Amid Mixed Returns
The latest data shows that Star Cement Ltd. has delivered a 52.9% increase in profits over the past year, a strong indicator of improving financial health. However, the stock’s price performance has been relatively muted, with a 1-year return of just +0.28% as of 07 February 2026. Shorter-term returns have been negative, including a 3-month decline of -12.52% and a 6-month drop of -18.36%. Year-to-date, the stock has fallen by 4.40%, and the most recent daily change was a decline of 3.30%. This divergence between profit growth and share price performance may reflect market concerns about valuation or broader sector challenges. Investors should weigh the positive earnings momentum against the subdued price action when considering the stock’s prospects.
Technical Outlook: Bearish Momentum
From a technical perspective, Star Cement Ltd. is currently graded as bearish. The recent price declines and negative short-term returns indicate downward momentum, which may deter momentum-driven investors. Technical indicators suggest caution, as the stock has struggled to maintain upward trends and faces resistance levels that could limit near-term gains. This bearish technical stance complements the 'Sell' rating, reinforcing the view that the stock may face headwinds in the coming months.
Sector and Market Context
Operating within the Cement & Cement Products sector, Star Cement Ltd. is classified as a small-cap company. The sector has experienced mixed performance recently, with some companies benefiting from infrastructure growth while others face margin pressures due to rising input costs. Star Cement’s valuation premium and modest quality grade suggest it is not currently positioned as a sector leader. Investors should consider broader sector dynamics alongside company-specific factors when evaluating this stock.
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Implications for Investors
For investors, the 'Sell' rating on Star Cement Ltd. signals a recommendation to exercise caution. The combination of an expensive valuation, bearish technical signals, and only average quality metrics suggests limited upside potential in the near term. While the company’s positive financial trend, highlighted by strong profit growth, is encouraging, it has yet to translate into meaningful share price appreciation. This disconnect may reflect market scepticism about sustainability or external risks affecting the cement sector.
Investors should carefully assess their risk tolerance and portfolio objectives before considering exposure to Star Cement Ltd. Those seeking stable growth and value may find better opportunities elsewhere, particularly among companies with stronger quality grades and more attractive valuations. Conversely, investors with a higher risk appetite might monitor the stock for potential technical reversals or valuation corrections that could present entry points in the future.
Summary
In summary, Star Cement Ltd. is currently rated 'Sell' by MarketsMOJO, with this rating last updated on 02 December 2025. The current analysis as of 07 February 2026 reveals a stock characterised by average operational quality, expensive valuation metrics, positive but uneven financial trends, and bearish technical indicators. This comprehensive assessment provides investors with a clear understanding of the stock’s present standing and the rationale behind its recommendation.
Investors are advised to consider these factors carefully and remain vigilant to any changes in the company’s fundamentals or market conditions that could influence its outlook.
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