Stock on midcapmania is Prism Johnson Ltd (Formerly Prism Cement Limited) is an integrated building materials company. Now the stock has corrected more than 25 percent from the recent top but the price is almost the same as it was more than 3 years ago (since 2015).

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The company has 3 segments which include cement, TBK (tiles bath kitchen) and ready mix concrete businesses (RMC)

Looking at the revenue mix majority of it comes from the cement business but that gets skewed towards cement when you look at its EBITDA break up

Now the stock has corrected from its Jan 2018 highs but its Q1FY19 performance was quite a star with strong volume growth leading to operating leverage playing out

Q1FY19 highlights

Cement Division reported ~13 percent volume growth vs June 2017

Volume growth in the Tiles business accelerated to ~7 percent on yoy basis

Concrete business third consecutive quarter of double digit revenue growth

The profitability in all 3 businesses has improved as stated below

Clearly there had to be 1 holder that was offloading stake and that’s evident going by the BSE release last week

HDFC Trustee Co has been reducing stake in the company, and has cut its stake to 2.75 percent as of August 2018, compared to a 5.26 percent in March 2018.

Remember the promoter entity has near the permissibile 75 percent stake in the company, and is currently at 74.87 percent.

Focusing on the cement business there are various positives is that its sales are mostly in the East and Central regions where prices and demand has been strong; most of its sales have been to the trade segment where prices are always better and its value added cement sales have been growing as well

This has resulted in EBITDA/tn reaching over 1000/tn mark which indicates a stellar performance though sustainability will be key..most of the street is bracing for a 900 to 950/tn on a sustainable basis

Standalone debt has also been reducing, and has fallen to Rs 1,420 crore at the end of Q1FY2019, down from Rs 1,817 crore at the end of FY 2015.

Management initiatives include cost rationalisation measures undertaken in all the 3 divisions; Focus on value added products leading to better product mix and have also indicated their focus on financial deleveraging

The key concerns include Execution delays at customer end both for real estate and infra sector and also bottoming out of interest rates at least in the short term which could result in higher finance costs

First Published:Aug 7, 2018 9:00 AM IST