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Emkay Global
Prism Johnson (Buy)
CMP: ₹65.9
Target: ₹84
Prism Johonson’s third quarter results were broadly in line with our estimates. EBITDA came in at ₹112 crore versus estimated ₹106 crore and OPM (operating profit margin) at 8.1 per cent vs estimated 7.5 per cent. Cement EBITDA/ton stood at ₹774 vs estimated ₹640. TBK segment OPM was at 0.9 per cent vs estimated 1.2 per cent.
Lower clinker sales resulted in an 8 per cent y-o-y fall in cement/clinker sales volumes. Realisation grew 1.8 per cent y-o-y, while opex/tonne fell 0.4 per cent y-o-y. EBITDA/ton improved 13.9 per cent y-o-y. Higher costs/lower demand resulted in a 67 per cent y-o-y fall in RMC segment EBITDA.
Tile volumes grew 3 per cent y-o-y with derived growth of 1.4 per cent for the segment. Standalone OPM was flat y-o-y at 0.9 per cent. Prism plans to set up solar power plants of 25 MW capacity in FY20E and a 22.5 MW waste heat recovery system (WHRS) by Q2FY21E to lower energy costs.
We cut FY20/21/22E EBITDA by 1.3 per cent/4.6 per cent/5.5 considering lower sales volumes/realisation. Cost-saving strategies may help improve cement segment profits. Maintain ‘buy’ with a revised SoTP-based TP of ₹84 (₹101 earlier).
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