MOSL: PRISM JOHNSON (Buy)-Strong performance across segments
Prism Johnson: Strong performance across segments
(PRSMJ IN, Mkt Cap USD0.9b, CMP INR116, TP INR140, 21% Upside, Buy)
- Healthy cement realization drives profitability: Prism Cement's (PRSMJ) standalone 4QFY18 revenue increased 13% YoY (+24% QoQ) to INR16.1b (est. of INR10.9b). Cement volumes stood at 1.68mt (+8% YoY, +23% QoQ), while cement realizations increased 7.4% QoQ, led by better prices in the central market. EBITDA/ton for the cement business stood at INR819 (-INR89 YoY, +INR239 QoQ) in 4QFY18.
- TBK turns EBIT positive: TBK's revenue declined 10% YoY (+22% QoQ) to INR4.77b (est. of INR4.07b) due to exclusion of excise duty and a change in freight arrangement. The segment continued growing volumes during the quarter. TBK reported positive EBIT of INR96m and OPM of 2% in 4QFY18.
- RMC segment witnesses sharp turnaround: RMC sales stood at INR3.86b (+20% YoY), led by healthy volume growth due to pick-up in infrastructure activity. Reported EBIT increased 30% YoY to INR112m for 4QFY18.
- EBITDA improvement led by healthy cement realization: EBITDA increased 41% YoY (+99% QoQ) to INR1.64b, with the margin at 10.2% (+3.8pp QoQ; +1.9pp YoY). Hence, PAT came in at INR627m (-11% YoY) v/s our estimate of INR618m. Standalone debt reduced by INR850m to INR14.85b in FY18.
- FY18 performance (Consol): Net sales increased 10% YoY to INR54.6b. EBITDA increased 29% YoY to INR3.9b. Tax rate stood at 45% v/s 66% in FY17, leading to PAT of INR533m v/s INR137m in FY17.
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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