MOSL: PRISM JOHNSON (Buy)-Cement division drives profitability
Prism Johnson: Cement division drives profitability
(PRSMJ IN, Mkt Cap USD0.6b, CMP INR87, TP INR104, 20% Upside, Buy)
- Cement utilizations reach 100%: 4QFY19 revenue increased 4% YoY (+17% QoQ) to INR16.8b (v/s est. of INR16.5b). Cement volumes stood at 1.75mt (+5% YoY,) implying 100% utilization, while cement realizations increased 0.5% YoY, led by stronger prices in the focus market. EBITDA/ton for cement increased by INR153/t YoY to INR971.
- TBK reports EBIT loss; RMC sales increase 2%: TBK's revenue increased 6% YoY to INR5.1b. Segment volumes increased 5.5% YoY. TBK reported EBIT loss of INR72m in 4QFY19 v/s EBIT of INR96m in 4QFY18. RMC sales stood at INR3.9b (+2% YoY). RMC EBIT came in lower at INR45m for 4QFY19 v/s EBIT of INR112m in 4QFY18 due to increase in fuel prices and intense competition. EBITDA increased 9% YoY (+69% QoQ) to INR1.8b, with margin at 11% (+0.5pp YoY; +3.4pp QoQ). Hence, adj. PAT came in at INR610m (-3%YoY) v/s est. of INR416m.
- FY19 Performance: Cement volumes grew 11% resulting in sales growth of 11% to INR60b; EBITDA and PAT grew 54% YoY and 2.2x to INR5.5b and INR1.57b, respectively.
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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