Prism Johnson - Strong TBK show; higher cement volume visibility - ICICI Securities

Prism Johnson's (PRSMJ) Q3FY21 standalone EBITDA grew 60% YoY to Rs1.8bn, broadly in line with our estimates. Besides, consolidated TBK revenue grew strong 16% YoY led by 23% YoY volume growth. TBK posted highest-ever quarterly EBITDA of Rs765mn (>3.3x YoY) with margins improving 910bps YoY to 14.1% owing to better product mix and operating leverage led by higher volumes. PRSMJ announced de-bottlenecking of 0.9mnte cement capacity at a capex of Rs1.4bn by Dec'21 which would drive volumes, and recent commissioning of WHRS would improve profitability by Rs100/te. Consolidated net debt declined Rs1.3bn (Rs3.7bn in 9MFY21) to Rs14.9bn as of Dec'20, which is likely to decline further by >Rs3.5bn from sales proceeds of insurance JV. Accordingly, PRSMJ is likely to post strong >20% RoEs from FY22E. Factoring improved margins in TBK, we increase our FY22-23E EBITDA by 8%, raise our target multiple to 7x (earlier 6x) and raise our target price to Rs118/sh (earlier: Rs85) based on 7x FY23E EV/E on half-yearly rollover. Upgrade to BUY. Key risks: lower than expected demand / prices across segments.

- Standalone revenues stood flat YoY at Rs13.8bn, in line with our estimates. Cement revenues too stood flat YoY at Rs6.2bn. Volumes grew 3% YoY while realisation fell 2% YoY/3.4% QoQ to Rs4,363/te owing to higher ex-freight sales. Premium products' contribution increased 400bps YoY to 27.6% in Q3FY21. TBK revenues increased 10% YoY to Rs4.7bn owing to strong growth in volumes led by revival in real estate and construction sectors. RMC revenues declined 15% YoY to Rs2.9bn, but are showing an improving trend on monthly basis as economic activity improves in tier-1 and metro cities. RMC EBITDA increased 23% YoY to Rs92mn led by cost rationalisation initiatives despite decline in revenues.

- Standalone EBITDA increased 60% YoY to Rs1.8bn, broadly in line with our estimates. Cement EBITDA/te increased 22% YoY to Rs918/te (I-Sec: Rs939/te). 10MW WHRS got commissioned in Q3FY21; while balance 12.5MW would get commissioned by Q4FY21. Similarly, 12.5MW solar power systems got commissioned in Q3FY21; while balance 12.5MW would get commissioned by Q4FY21.

- Consolidated TBK revenues grew 16% YoY led by 23% YoY volume growth to 14.4MSM. Revenue from sanitary ware & bath fittings, and marble & quartz, grew ~31% YoY. TBK posted highest-ever quarterly EBITDA of Rs765mn (>3.3x YoY) with margins improving 910bps YoY to 14.1% owing to better product mix and operating leverage. RMC EBITDA increased 23% YoY to Rs92mn led by cost rationalisation initiatives despite decline in revenues. Consolidated EBITDA increased 49% YoY to Rs1.9bn. Recurring PAT stood at Rs672mn. Consolidated net debt (ex-insurance) reduced by Rs1.3bn (Rs3.7bn in 9MFY21) to Rs14.9bn, which is likely to decline further by >Rs3.5bn from sales proceeds of insurance JV in H1FY22.

Shares of Prism Johnson Ltd was last trading in BSE at Rs.90.75 as compared to the previous close of Rs. 89.7. The total number of shares traded during the day was 77350 in over 1829 trades.

The stock hit an intraday high of Rs. 92.35 and intraday low of 87. The net turnover during the day was Rs. 6981635.

Source : Equity Bulls

Keywords