>Prism Cement Ltd. (ANAGRAM)

EARNING REVIEW

RESULT HIGHLIGHTS
Prism cement reported a rise of 9.22% YoY in sales to Rs 249.74Cr due to higher cement prices whereas Operating Profit went down marginally by 1.85% from Rs88.34Cr to 86.71 Cr on account of higher selling and administrative cost. Tax rate for the quarter was higher at 40% while the adjusted PAT witnessed a decline of 22.02% YoY to Rs50.19 Cr.

Cement and clinker sales volume increased marginally at 0.84mn tonnes from 0.83 tonnes in the previous corresponding quarter. Sales were better than the previous corresponding quarter due to rise in net realizations.

Total cost was up by 16.18% YoY, resulting into fall of 1.85% YoY in EBITDA margin. The overall Selling and administrative cost was up by 21% YoY and employee cost was also up by 14.84% YoY, putting additional pressure on profitability of operations. Tax rate for the quarter was higher at 40% while the adjusted PAT witnessed a decline of 22.02% YoY to Rs50.19Cr. But EBITDA margins improved compared to last quarter due to decline in the prices of the international coal.


RECOMMENDATIONS
We believe, Prism is at comparable advantage against peers given its close to zero Debt/Equity ratio, as well as it looks fairly valued on EV/tonne basis.

At the current price, Prism cement trades at 5.12 times its TTM earning of Rs 5.27 and EV/EBITDA of 2.93 times its TTM EBITDA of Rs 269.09 Cr. With the softening of international coal and coke prices, cost pressure for the cement companies has eased out. Also, most of the companies have consumed their high cost coal inventories. Thus we expect that during the coming quarters cement companies will show improvement in profits. We maintain our outperform rating on the stock.

To see full report: PRISM CEMENT