Prism Cement – Initiating Coverage Report By IndiaNivesh

Since our Idea note dated May 5, 2014 (at then CMP of Rs 50), Prism Cements stock has delivered 48% absolute return. Demand revival leading to higher capacity utilization levels in FY15-16E (across all business segments) when coupled with cost saving initiatives/ operational efficiencies across all business segments, would translate to ~Rs 1.8 bn of cost savings. Accordingly, we expect EBITDA margins to improve from ~2.7% (in FY14) to ~9.7% (in FY16E). Using sum-of-the parts based valuation methodology we arrived at revised PT of Rs 117. Given the 58% upside we maintain BUY on the stock.

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