Prism Johnson - Strong operating show across divisions - ICICI Securities

Prism Johnson's (PRSMJ) Q2FY21 standalone EBITDA grew 85% YoY to Rs1.5bn, significantly above our/consensus estimates owing to sharp fixed cost reduction and volume recovery across key segments. Cement volumes grew 3% YoY with EBITDA/te increasing 65% YoY to Rs1,012/te owing to better-than-expected realisation and lower costs. Consolidated TBK revenue grew 6% YoY with EBITDA margins improving to 10.7% from 4.2% in Q2FY20 led by product mix improvement and fixed cost reduction. Consolidated net debt reduced by Rs2.4bn to Rs16.2bn during H1FY21 mainly led by working capital release of Rs5.7bn post capex spend of Rs907mn. Factoring Q2FY21 beat, we raise FY22E EBITDA by 21% and target price to Rs85/share (earlier: Rs54) based on 6x Sep'22E EV/E on half-yearly roll-over. Maintain ADD. Sustained turnaround in TBK may lead to re-rating, in our view.

- Standalone revenue declined 8% YoY to Rs12bn, in-line with our estimates. Cement revenue increased 3% YoY to Rs6bn led by volumes (to 1.3mnte), while realisation stood flat YoY (declined 1.7% QoQ). Premium products' contribution increased 400bps YoY to 27% in Q2FY21. TBK revenue increased 1% YoY to Rs4.1bn, while RMC revenue declined 39% YoY to Rs2.1bn mainly due to slow recovery of construction activities in metro cities and extended monsoons. Management mentioned of better demand environment with cement and TBK volumes achieving pre-Covid levels; while RMC continued to show an improving trend on monthly basis with economic activities reviving in tier-1 and metro cities.

- Standalone EBITDA increased 85% YoY to Rs1.5bn (I-Sec: Rs872mn). Cement EBITDA/te increased 65% YoY to Rs1,012/te (I-Sec: Rs810/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 registered EBITDA of Rs180mn with sharp improvement in margins at 4.4% owing to higher volumes and reduced cost. RMC division EBITDA also increased 11% YoY to Rs50mn despite lower revenues owing to cost rationalisation. Recurring PAT stood at Rs627mn.

- Consolidated revenue declined 5% YoY to Rs13.5bn. Consolidated EBITDA doubled YoY to Rs1.7bn. Recurring PAT stood at Rs471mn. Consolidated TBK division revenue increased 6% YoY to Rs4.9bn, while TBK EBITDA increased 2.7x YoY to Rs524mn.

- Consolidated net debt (ex-insurance) reduced by Rs2.4bn to Rs16.2bn mainly led by working capital release of Rs5.7bn post capex spend of Rs907mn in H1FY21. With improving performance & stake sale in insurance subsidiary for Rs2.9bn, we estimate consolidated net debt to decline by Rs9bn over FY20-FY23E to Rs9.3bn by FY23E.

Shares of Prism Johnson Ltd was last trading in BSE at Rs.75.4 as compared to the previous close of Rs. 75.4. The total number of shares traded during the day was 20349 in over 279 trades.

The stock hit an intraday high of Rs. 75.8 and intraday low of 73. The net turnover during the day was Rs. 1523259.

Source : Equity Bulls

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