Prism Johnson - Expansion to aid growth visibility - ICICI Securities

Prism Johnson's (PRSMJ) Q1FY22 standalone EBITDA grew 3.2x YoY to Rs1.5bn, broadly in line with our and consensus estimates. Cement volumes declined 30% QoQ owing to covid resurgence; however realisation grew 5.4% QoQ resulting in EBITDA/te increasing 32% QoQ to Rs1,156/te. PRSMJ would be expanding its cement capacity by 1.9mnte in two phases by Sep'23 and tile capacity by 8.5msm by Mar'23 providing improved revenue visibility. Besides, consolidated net debt is likely to reduce from Rs12.3bn in Mar'21 to ~Rs8.3bn by Mar'23. We broadly maintain our FY23E EBITDA and raise our target price to Rs152/sh (earlier: Rs150), based on 8x Jun'23E EV/E on quarterly rollover. Maintain ADD. Key risks: lower than expected demand / prices across segments.

- Standalone revenues up 46% YoY at Rs11.2bn (I-Sec: Rs12.0bn). Standalone EBITDA increased 3.2x YoY to Rs1.5bn (I-Sec: Rs1.4bn). Cement revenues were up 10% YoY at Rs6.1bn. Volumes grew 11% YoY to 1.3mnte while realisation grew 5.4% QoQ (flat YoY) at Rs4,589/te. Premium products' contribution increased 190bps YoY to 28.1% in Q1FY22. Cement EBITDA/te grew 4% YoY and 32% QoQ to Rs1,156/te (I-Sec: Rs981/te) driven by cost rationalisation and increase in realisations. RMC revenues increased 2.2x YoY (down 30% QoQ) to Rs2.3bn, while RMC EBITDA loss reduced sharply to Rs88mn against a loss of Rs500mn in Q1FY21 owing to cost rationalisation initiatives.

- Consolidated TBK revenues grew 89% YoY (fell 43% QoQ) to Rs3.5bn aided by 78% YoY volume growth in Q1FY22. EBITDA stood at Rs90mn as against a loss of Rs471mn in Q1FY22. EBITDA margin was at 2.5%, down 1000bps QoQ, due to impact of second wave of covid during Q1FY22. Overall, consolidated EBITDA rose 4.4x YoY to Rs1.2bn. Recurring PAT stood at Rs147mn.

- Capacity expansion plans to aid growth visibility: Debottlenecking at Satna plant in Madhya Pradesh will increase cement capacity by 0.9mnte and clinker capacity by 1.1mnte by Jun'22 at a capex of Rs1.4bn. Company further plans to increase grinding capacity (by 1.0mnte at Satna by Sep'23 at a capex of Rs2.5bn), which will take the total cement capacity to 7.5mnte. It also plans to increase its tile production capacity from 60msm currently to 68msm by Mar'23. This includes greenfield tile capacity expansion (2.5msm at Panagarh, West Bengal, by Jan'23 for a capex of Rs550mn, and 6msm at its JV entities by Mar'23 for a capex of Rs700mn), which is likely to be met primarily through internal accruals.

- Consolidated net debt (ex-insurance) increased by Rs0.83bn to Rs13.2bn as of Jun'21 owing to working capital needs. Company is likely to incur capex of Rs10bn over FY22E-FY23E including maintenance capex. Insurance JV stake sale is still awaiting regulatory approvals; it would further reduce net debt by Rs3.5bn.

Shares of PRISM JOHNSON LIMITED. was last trading in BSE at Rs. 132.85 as compared to the previous close of Rs. 130.3. The total number of shares traded during the day was 20804 in over 669 trades.

The stock hit an intraday high of Rs. 133.6 and intraday low of 131.55. The net turnover during the day was Rs. 2760184.

Source : Equity Bulls

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