MOSL: PRISM CEMENT (Buy)-Weak performance in the run-up to GST rollout
​Prism Cement: Weak performance in the run-up to GST rollout
(PRSC IN, Mkt Cap USD0.9b, CMP INR120, TP INR140, 16% Upside, Buy)
- Volume growth impacted: Prism Cement's (PRSC) standalone 1QFY18 revenue increased 3% YoY (-7% QoQ) to INR13.2b (est. of INR14.6b), led by a 3% YoY decline in cement volumes. Cement realizations increased ~3% QoQ (~+11% YoY) to INR4,620 (est. of INR4,659) due to improved pricing in its focus markets.
- TBK losses reduce marginally QoQ: TBK segment’s revenue fell 4% YoY (+19% QoQ) to INR4.26b (est. of INR4.45b) due to a sharp decline in sales on account of destocking prior to GST implementation. TBK segment reported PBIT loss of INR224m v/s loss of INR265m in 4QFY17.
- Cement pricing improvement drives margin uptick: Overall EBITDA declined 20% YoY (-34% QoQ) to INR762m, with the margin at 5.8% (-2.4pp QoQ; -1.6pp YoY). Cement costing increased on account of higher power & fuel cost/t (higher petcoke prices), freight costs (overloading restriction implementation) and higher employee cost. Cement EBITDA/ton stood at INR647 (+INR35/t YoY; -19% QoQ). PAT stood at INR167m, as against INR156m in 1QFY17.
- RMC segment posts EBIT loss: RMC sales stood at INR3.2b (+2.3% QoQ, -1.6% YoY). EBIT loss for RMC was INR66m for 1QFY18 (v/s +INR108m in 1QFY17) due to higher cement prices.
Prism Johnson Limited, formerly Prism Cement Limited, is a building materials company. The Company has interest in Portland cement, tiles, bathroom and kitchen (TBK) and ready mixed concrete (RMC). The Company's segments include Cement, TBK, RMC and Insurance. The Company has three divisions: Prism Cement, H&R Johnson (India) (HRJ) and RMC Readymix (India). Prism Cement is a cement manufacturer with units at Satna, Madhya Pradesh with a nameplate capacity of approximately 5.6 million tons per annum (MTPA) of cement. It manufactures Portland Pozzolana Cement (PPC) under the brand name Champion, Champion Plus, Hi-Tech and DuraTech. HRJ operates in TBK segment and offers end-to-end solutions of tiles, sanitary ware, bath fittings, kitchens and engineered marble and quartz. RMC Readymix (India) is ready mixed concrete manufacturer. It offers various concretes, including Enviroprotectcrete, FRCcrete, Thermocrete, Dyecrete and Perviouscrete.
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