Prism Johnson Ltd. share price target

Prism Johnson’s (PRSMJ) Q3FY23 standalone EBITDA declined 48% YoY to Rs634mn, below our / consensus estimates. Cement volumes (including clinker) were up ~10% YoY while cement EBITDA/te fell 23% YoY to Rs295 (however, up 28% QoQ) owing to higher energy costs.

Cement profitability increases 4% YoY: 2QFY20 revenues declined 2% YoY to INR13.1b (in line with est.). Cement and clinker volume growth declined ~6% YoY due to heavy monsoons and overall economic slowdown. Cement...

Healthy realizations drive cement profitability: 1QFY20 revenue inched up 1% YoY (-10% QoQ) to INR15.1b (in line with our est.). Cement volumes grew a modest 2%YoY. However, combined cement & clinker volume declined ~7% YoY, which can be attributed to a sharp fall in clinker volumes. Cement Division's EBITDA/t improved to INR1,111 as against INR1,009 in 1QFY19, mainly due to higher realizations offsetting the overall increase in costs. TBK reports EBIT loss; RMC EBIT impacted by high cement prices: TBK's revenue increased 6% YoY to INR4.2b. Segment volumes increased 3% YoY....

5 June 2018 PRSMJs focus markets in Central India are likely to witness healthy utilization uptick, driven by demand improvement. This coupled with increased premium sales for PRSMJ should drive margin expansion over FY18-20, resulting in segment EBITDA CAGR of 21%. Post FY20, the cement business should continue to see margin expansion, led by commissioning of WHRS (reduce power cost) and split grinding unit with a capacity of 1-1.5mt in UP, lowering freight cost. We expect healthy growth in volumes led by effective marketing initiatives and product innovation. We expect healthy improvement in consolidated margins in FY20 (from 3.8% in FY18), led by improvement in standalone utilization levels. Working capital reduction coupled with margin improvement should drive up RoCE for the segment. EBIT margin for the business was ~3% in 4QFY18 after EBIT loss in 1HFY18, led by housing and the governments push to infra activities.

EBITDA increased 227% YoY (+112% QoQ) to INR822m, with the margin at 6.3% (+3.11pp QoQ;+4.13pp YoY). Cement realizations increased 6% QoQ to INR4177/t due to normalization of pricing in focus markets.Cement costing increased on account of higher power & fuel cost/t (higher petcoke prices). Cement EBITDA/ton stood at INR588 (+46% YoY) due to healthy realizations, partially offset by cost push. Hence, PAT stood at INR149m v/s a loss of INR470m in 3QFY17.

Prism Cement Limited (PCL) is an Integrated Building Materials company, and has wide range of products from cement, ready mixed concrete (RMC), tiles, bath products to kitchens (TBK). Its cement plant is located in central India with units in Satna (Madhya Pradesh) with a capacity of 7 MTPA. It currently operates 87 ready mixed concrete p..

We expect the cement segment's profitability to improve in 2HFY18/FY19 (v/s 1HFY18), led by improved pricing on the back of consolidation, limited supply addition and improved utilization in the central region. However, we expect some of these benefits to be negatively impacted by cost push in form of higher power...

TBK losses reduced: TBK segment's revenue fell 9% YoY (-3% QoQ) to INR4.15b (est. of INR4.54b), as the prior-year period included excise duty in revenues. Volumes increased YoY after declining in the previous quarters. EBIT loss in TBK reduced to INR50m from INR181m in 2QFY17. The segment recorded near EBITDA breakeven in the quarter. EBITDA hurt by lower realization, cost push: EBITDA rose 52% YoY (-51% QoQ) to INR376m, with the margin at 3.2% (-2.53pp QoQ; +1.1pp YoY). Cement costing increased led by higher power & fuel cost/t (higher petcoke...

Strong cement performance: Cement realization was Rs 4,150 per ton, up Rs 350 QoQ. EBITDA per ton increased by Rs 400 QoQ to Rs 910 due to higher realization and operating leverage. Cement volume was 1.56 mnt, up 15% YoY and 30% QoQ

Strong volume growth: Prism Cement’s (PRSC) standalone 1QFY17 revenues declined 1.3% YoY to INR12.8b (15% miss) due to a fall in TBK revenue. Amid industry volume growth of 4%, PRSC’s cement volumes rose 13.7% YoY (est. of +6% YoY) to 1.55mt, led by a 9.4%/7.9% QoQ/YoY increase in cement realizations to INR4,111/ton. Motilal Oswal SOTP value for PRSC is INR122/share (EV of USD113/ton, and 9.5x FY18E cement EBITDA, 5x FY18E RMC EBITDA and 8x FY18E TBK EBITDA). PRSC is a play on central India recovery, although its longterm growth is likely to lag peers on the back of limited expansion. Profitability of TBK business remains a cause of concern. Maintain Buy.

Cement Division continues to outperform- With an installed capacity of 5.6MTPA of cement capacity and 0.6 MTPA of clinker capacity, company has emerged amongst the top five manufacturers of OPC & PPC...