Reduce Prism Johnson Ltd For Target Rs.169 - Elara Capital
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Bottomline still in the red
Operational performance as expected
Prism Johnson’s (PRSMJ IN) consolidated net sales fell ~1% YoY and QoQ each to ~INR 17bn. EBITDA surged ~122% YoY and ~45% QoQ to ~INR 1.3bn versus our expectations of INR 1.4bn. Adjusted loss for Q3FY24 stood at INR 35mn versus a loss of INR 533mn in Q3FY23 and a loss of ~INR 157mn in Q2FY24. In early-January 2024, PRSMJ entered into a supply agreement to procure 0.48mn tonnes from a cement grinding unit at Amethi (Uttar Pradesh). Net debt stood at ~INR 10.9bn versus ~INR 14.9bn in Q3FY23 and ~INR 9.5bn in Q2FY24.
Cement sales volume up ~9% YoY and ~3% QoQ
Sales volume rose ~9% YoY and ~3% QoQ to 1.49mn tonnes. Also, realization dipped ~2% YoY and ~3% QoQ to INR 5,022/tonne. Operating cost was down ~12% YoY and QoQ each to INR 4,239/tonne. Thus, EBITDA/tonne jumped ~167% YoY and ~116% QoQ to INR 787. The timeline for addition of 24MW wind power capacity and 8MW solar power capacity has been revised to March 2025 and June 2024, respectively, from September 2024 stated for both projects earlier.
TBK tumbles, RMC better
Revenue from tiles, bathroom & kitchen (TBK) fell ~5% YoY and ~4% QoQ to ~INR 5.6bn. Consolidated tile sales volume dipped ~5% YoY and ~6% QoQ to ~13mn sqm. EBITDA margin stood at 4.5% versus 6.3% in Q3FY23 and 7.2% in Q2FY24. RMC revenue grew ~8% YoY and QoQ each to ~INR 3.7bn. EBITDA margin improved to 1.6% versus 0.8% in Q3FY23 and negative 1.5% in Q2FY24.
Valuation: revise to Reduce with a higher TP of INR 169
We cut our EBITDA estimate by ~7% for FY24E but largely retain it for FY25E-26E. We roll over to December 2025E from September 2025E and raise our SOTP-TP to INR 169 from INR 154, valuing the cement business at 9x (unchanged) December 2025E EV/EBITDA and other businesses at 12x (unchanged) December 2025E EV/EBITDA. As PRSMJ is up ~17% since the release of our report, ‘Operating leverage lifts TBK margin’ dated 3 November 2023, we revise our rating to Reduce from Accumulate.
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