Expect Prism Cement to test Rs 117: Daljeet Singh Kohli

Daljeet Singh Kohli, Head of Research at IndiaNivesh told CNBC-TV18, “In May 2014, we have recommended Prism Cement at Rs 50 with an initial target of Rs 85 and now we are increasing the target to Rs 117.” “The demand for cement is good, there is lot of expectation that there will be too much of demand once the Modi government starts implementing various plans. So, this company will also be a beneficiary of that. The good part is that in the last two years they have done lot of cost cutting measures on cement part and all those have started yielding result in the last quarter, which was the first quarter when the benefits of that has started coming and over next two quarters full benefits will come,” he added. “The margin which was 3 percent can go up to 13 percent in cement business alone. So, that is a very big trigger and a swing factor. The second swing factor will come from business product which is the tiles business and the building product business. As a cautious decision they were running at a very low capacity because the power cost which is the maximum cost was very high. Their 43 percent of capacity has already switched to gas and gas is now available at a reasonable price in Andhra Pradesh and other areas. So, the utilisation level will go up and we have seen that other companies are growing at 25-30 percent and this will also grow.” “RMC business which was running at 46 percent utilisation level as there was no demand, because there infrastructure projects were not there and this company is the second larges RCM producer in India, so they will get the benefit from the revival and that is the reason why the stock will move up.”

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