Between FY16 and FY18, company’s revenues grew at a CAGR of 1.3% while profits have jumped from Rs 81 mn in FY16 to Rs 705 mn in FY18 led by improvement in margins and capacity utilisation.
We recently interacted with the management of Prism Johnson to get an insight into demand scenario in cement, tiles and RMC and company’s plans going forward. Prism Johnson (Formerly Prism Cement) is one of India’s leading integrated building materials companies, with a wide range of products from cement, ready-mixed concrete, tiles, bath products. The company has three divisions, viz. Cement, H & R Johnson (India), and RMC (India). Prism Cement Limited also has a 51% stake in Raheja QBE General Insurance Company, a JV with QBE Group of Australia. It has a cement capacity of 7MT concentrated in central India and tile division has a capacity of 68 mn sqm spread across 11 manufacturing plants across the country in ceramic/vitrified tiles. It is also one of India’s leading ready-mixed concrete manufacturers with 93 ready-mixed concrete plants in 44 cities/towns across the country.
Between FY16 and FY18, company’s revenues grew at a CAGR of 1.3% while profits have jumped from Rs 81 mn in FY16 to Rs 705 mn in FY18 led by improvement in margins and capacity utilisation. While the company intends to improve the performance in terms of higher volumes of cement, tiles and RMC, its focus would continue to remain on working capital improvement.
At current price, the stock is trading at 62.9x P/E and 16.4x EV/EBITDA on FY18 estimates. We believe that demand environment in tiles segment remains challenging but its cement segment is adequately placed to capture the strong demand in its key operating regions. Going ahead, the focus of the company would be on improving the utilisation at its plants, which will lead to margin improvement and better working capital management. We do not have any rating on the stock.