Prism Cement – Stock Idea By IndiaNivesh

Prism Cement is one of the few integrated building materials company (given their wide presence across entire range of building solutions) with: (1) ~5.6 mtpa cement plant capacity in central India; (2) with 54 msm of Ceramic tile capacity; & (3) being a key domestic players in RMC space.

Recommend BUY with PT of Rs 60/share

At CMP of Rs 50, Prism is trading at FY15E EV/EBITDA multiple of 9.6x. We have valued all 3 business by assigning target EV/EBITDA multiple of 6.0x for cement business, 7.0x for Tiles business and 5.0x for RMC business, respectively to arrive at the business value. We have valued Prism using Sum of the Parts (SoTP) based valuation methodology to arrive at Price target of Rs 60. Given the 20% upside we recommend BUY on the stock. Our target price is taking into account conservative estimates. Post Q4 results and meeting with the management, for any potential the target price could be revised upwards.

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