MOSL: PRISM JOHNSON (Buy)-Strong performance led by cement division
Prism Johnson: Strong performance led by cement division
(PRSMJ IN, Mkt Cap USD0.9b, CMP INR117, TP INR136, 16% Upside, Buy)
- Cost savings drive profitability for cement segment: Prism Cement's (PRSMJ) standalone 1QFY19 revenue grew 13% YoY (declined 7% QoQ) to INR15b (our estimate was INR16.7b). Cement volumes grew 13% YoY (declined 1% QoQ) to 1.67mt (our estimate was 1.6mt) on low base from previous quarter due to GST and impact of sand mining ban. Cement realization declined 2% QoQ, led by weaker prices in focus market. EBITDA/ton for cement improved by INR190 QoQ (and INR361 YoY) to INR1,009, led by lower costs.
- Reduced losses in TBK segment: TBK revenue declined 7% YoY (and 16% QoQ) to INR3.9b. The YoY decline was due to exclusion of excise duty and a change in freight arrangement. Segment volumes increased 7% YoY. TBK reported EBIT loss of INR92m in 1QFY19 v/s EBIT loss of INR224m in 1QFY18. Consolidated margin for HRJ was 3.9% in 1QFY19 against 3.7% in FY18.
- RMC segment witnesses sharp turnaround: RMC sales grew 13% YoY to INR3.7b, led by healthy volume growth due to pick-up in infrastructure activity. Reported EBIT was INR106m against EBIT loss of INR66m in 1QFY18.
- EBITDA improvement led by healthy cement realization: EBITDA grew 130% YoY (and 7% QoQ) to INR1.8b, with margin at 12.1% (+6.14pp YoY; +1.59pp QoQ). PAT grew 321% YoY to INR702m against our estimate of INR429m. Standalone net debt reduced from INR14.8b in FY18 to INR14.2b in 1QFY19.
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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