Markets

Broker's call: Prism Johnson (Buy)

| Updated on February 12, 2020 Published on February 13, 2020

Emkay Global

Prism Johnson (Buy)

CMP: ₹65.9

Target: ₹84

Prism Johonson’s third quarter results were broadly in line with our estimates. EBITDA came in at ₹112 crore versus estimated ₹106 crore and OPM (operating profit margin) at 8.1 per cent vs estimated 7.5 per cent. Cement EBITDA/ton stood at ₹774 vs estimated ₹640. TBK segment OPM was at 0.9 per cent vs estimated 1.2 per cent.

Lower clinker sales resulted in an 8 per cent y-o-y fall in cement/clinker sales volumes. Realisation grew 1.8 per cent y-o-y, while opex/tonne fell 0.4 per cent y-o-y. EBITDA/ton improved 13.9 per cent y-o-y. Higher costs/lower demand resulted in a 67 per cent y-o-y fall in RMC segment EBITDA.

Tile volumes grew 3 per cent y-o-y with derived growth of 1.4 per cent for the segment. Standalone OPM was flat y-o-y at 0.9 per cent. Prism plans to set up solar power plants of 25 MW capacity in FY20E and a 22.5 MW waste heat recovery system (WHRS) by Q2FY21E to lower energy costs.

We cut FY20/21/22E EBITDA by 1.3 per cent/4.6 per cent/5.5 considering lower sales volumes/realisation. Cost-saving strategies may help improve cement segment profits. Maintain ‘buy’ with a revised SoTP-based TP of ₹84 (₹101 earlier).

Published on February 13, 2020
  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.