Prism Johnson - TBK / RMC likely to drag in FY21E - ICICI Securities

Prism Johnson (PRSMJ) Q1FY21 EBITDA was down 78% YoY owing to losses in TBK and RMC divisions; though the losses were restricted owing to better cost controls. Cement volumes were down 23% YoY; while EBITDA/te was flat YoY at Rs1,116/te. Consolidated debt was down Rs2.8bn owing to better working capital management. Cement and TBK revenues are marginally down in Jul'20; while RMC revenues are still down 50% YoY in Jul'20. Factoring better cost controls, we raise FY22E EBITDA by 4% and raise our target price to Rs54/share (earlier Rs52) based on 6xFY22E EV/E. Maintain ADD.

- Standalone revenue declined 49% YoY to Rs7.6bn (I-Sec: Rs7.9bn). Cement revenue declined 25% YoY to Rs5.5bn. Volumes including clinker declined 23% YoY to 1.19mnte (I-Sec: 1.26mnte); while realisation increased 3.9% QoQ / declined 1.4% YoY to Rs4,597/te, in-line with estimates. Premium products' volume contribution increased to 26% (vs 22% in FY20) of total volumes in Q1FY21. TBK revenue declined 65% YoY at Rs1.5bn, while RMC revenue declined 80% YoY to Rs729mn. Cement and TBK revenues are marginally down in Jul'20; while RMC revenues are still down 50% YoY in Jul'20 as urban demand is yet to recover.

- Standalone EBITDA declined 78% YoY to Rs403bn (I-Sec: Rs191mn). Cement EBITDA/te stood flat YoY at Rs1,116/te (I-Sec: Rs1,057/te) owing to lower cost. Besides, several cost initiatives such as commissioning of WHRS, solar power and change in fuel mix are expected to further reduce cost. TBK division reported EBITDA loss of Rs422mn, while RMC EBITDA loss stood at Rs500mn in Q1FY21. Net loss stood at Rs525mn.

- Consolidated revenue declined 46% YoY to Rs8.6bn. Consolidated EBITDA declined 88% YoY to Rs223mn. Net loss stood at Rs917mn. Consolidated TBK division revenue declined 60% YoY to Rs1.9bn, while TBK EBITDA loss stood at Rs471mn. Sanitaryware & Faucets revenues declined 43% YoY. In Jul'20, The board has approved divestment of its entire holding of 51% in Raheja QBE General Insurance Company (RQBE) to QORQL Pvt. Ltd (majorly owned by Mr. Vijay Shekhar Sharma and Paytm) for an aggregate consideration of Rs2.9bn subject to requisite approvals. The said transaction is targeted to complete by Mar'21.

- Consolidated debt was down Rs2.8bn owing to better working capital management. With improving performance and sale of stake in insurance subsidiary, we estimate consolidated net debt to decline by Rs3.4bn over FY20-FY22E to Rs14.8bn by FY22E.

Shares of Prism Johnson Ltd was last trading in BSE at Rs.48 as compared to the previous close of Rs. 47.75. The total number of shares traded during the day was 27079 in over 313 trades.

The stock hit an intraday high of Rs. 49.45 and intraday low of 47.65. The net turnover during the day was Rs. 1310218.

Source : Equity Bulls

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