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Prism Cem Sensex
IndiaNivesh Research IndiaNivesh Securities Private Limited601
& 602, Sukh Sagar, N. S. Patkar Marg , Girgaum Chowpatty,
Mumbai 400 007. Tel: (022) 66188800
IndiaNivesh Research is also available on Bloomberg INNS,
Thomson First Call, Reuters and Factiva INDNIV.
Prism Cement Ltd.
STOCK INFO
BSE 500338
NSE PRISMCEM
Bloomberg PRSC IN
Reuters PRIS.BO
Sector Cement & Cement Products
Face Value (Rs) 10Equity Capital (Rs mn) 5,034
Mkt Cap (Rs mn) 25,168
52w H/L (Rs) 51/ 23
3m Avg Daily Vol. in mn (BSE+NSE) 542,121
SHAREHOLDING PATTERN %
(as on 31st Mar. 2014)
Promoters 74.9
FIIs 2.8
DIIs 3.7
Public & Others 18.7
Source: BSE
STOCK PERFORMANCE (%) 1m 3m 12mPRISM CEMENT 19 119 18
SENSEX 5 16 19
PRISM CEMENT v/s SENSEX
Source: Capitaline, IndiaNivesh Research
Source: Capitaline, IndiaNivesh Research
Stock IdeaMay 14, 2014
CMP : Rs.50
Rating : BUY
Target : Rs.60
Rating : NR
Target : NR
Current Previous
(NR-Not Rated)
Daljeet S. Kohli
Head of Research
Mobile: +91 77383 93371, 99205 94087
Tel: +91 22 66188826
[email protected]
Y. Santosh
Research Analyst
Mobile: +91 77383 93416
Tel: +91 22 66188840
[email protected]
Prism Cement is one of the few integrated building materials
company (given
their wide presence across entire range of building solutions)
with: (1) ~5.6 mtpacement plant capacity in central India; (2) with
54 msm of Ceramic tile capacity;
& (3) being a key domestic players in RMC space.
~5.6 mtpa cement plant to benefit from revival in Cements space
duringFY15-16E
Currently Prism Cement operates the ~5.6 mtpa plant at Satna,
Madhya Pradesh,
which also happens to be limestone belt. This access to
limestone reserves ensure
adequate availability of raw materials. Currently, the plant in
our view is operating
at ~80% levels. Post new government coming to power, we expect
Infra activity to
pick-up and Prism would be no exception to gain from such
revival in cement
demand. This demand revival would contribute to Prisms business
as no major
capacity addition is there except for R-Infras 2.3 mtpa cement
plant (at Maihar,
MP).
Particulars (Rs mn) FY14E FY15E FY16E
Net Sales 49,309 52,127 56,178
EBITDA 1,715 4,078 5,983
PAT (742) 173 1,816
Earnings Per Share (1.5) 0.3 3.6
Source: IndiaNivesh Research
EBITDA margins to expand from FY15E onwardsWe are of view that
Prism Cement would experience sharp EBITDA margin expansion
during FY15-16E, owing to the ongoing cost saving initiatives
across all segments-
Cement, Tiles Bathroom Kitchen (TBK) and RMC. Our view is on the
back of (1) New
silo Unit commencing operations at Satna: (2) Higher pet-coke
consumption leading
to lower power consumption, (3) commencement of captive coal
procurement at
chindwara, and (4) substitution of expensive LNG with three
captive gasifiers across
TBK segment. All these initiatives, coupled with uptick in
Cement/ Tiles business
demand would translate to higher return ratios (indicating
benefits of operating
leverage coming in to play). We expect EBITDA margins to expand
from ~3.0% levels
in FY14E to over 10% by FY16E.
Turnaround in Tiles business on Cards
H&R Johnson has been market leader in Tiles business for
over last few years.
(1) Aggressive marketing by peers, (2) Chinese aggressive
pricing policy and (3) peers
expansion has affected the growth prospects of H&R up to
certain extent. Also,
H&Rs plants have been impacted due to higher fuel costs,
resulting in margin
pressures. With new gasifiers getting commissioned, coupled with
revival in demand
trends, we expect H&R to witness ramp-up in their Tiles
business, which in turn
would translate to margins/ return ratios revival.
Cash Flow Generating Potential to help in Balance Sheet
de-leveraging
Prism has been generating cash flow from operations to the tune
of ~Rs 2 bn during
FY12-14E. With demand revival across Cements and Tiles business
coupled with
EBITDA margin expansion comforts us that Prism is poised to
generate Cash flow
from Operations to the tune of over Rs 3.5 bn each for FY15-16E.
Again this cashbeing generated could be partly used towards capex
and partly for debt repayment.
As a result we expect de-leveraging to happen going forward.
8/12/2019 Prism Cement Stock Idea 14052014
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IndiaNivesh Research Prism Cement Ltd | Stock Idea
Stock Idea (contd...)
May 14, 2014 | 2
Prism Cement is likely to announce good set of Q4FY14 results,
on the back of
likely turn-around in its Cements business.
Recommend BUY with PT of Rs 60/share
At CMP of Rs 50, Prism is trading at FY15E EV/EBITDA multiple of
9.6x. We have
valued all 3 business by assigning target EV/EBITDA multiple of
6.0x for cement
business, 7.0x for Tiles business and 5.0x for RMC business,
respectively to arrive atthe business value. We have valued Prism
using Sum of the Parts (SoTP) based
valuation methodology to arrive at Price target of Rs 60. Given
the 20% upside we
recommend BUY on the stock.
Our target price is taking into account conservative estimates.
Post Q4 results and
meeting with the management, for any potential the target price
could be revised
upwards.
Particulars (Rs mn)FY16E
EBITDA
Target
Multiple (x)
Cements Business 3,316 6.0x 19,896
TBK Business 2,021 7.0x 14,147
RMC Business 646 5.0x 3,230
Enterprise Value 37,273
Debt 19,784
Cash 11,989
M-Cap for Prism Cement 29,478
Equity Shares 503
Treasury Stock 1
Target Price 60
Source: IndiaNivesh Research
8/12/2019 Prism Cement Stock Idea 14052014
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IndiaNivesh Research Prism Cement Ltd | Stock Idea
Stock Idea (contd...)
May 14, 2014 | 3
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