Add Prism Johnson, target price Rs 52: ICICI Securities

ICICI Securities has given an add rating to Prism Johnson with a target price of Rs 52. The share price moved down by -2.35 per cent from its previous close of Rs 53.20. The stock’s last traded price is Rs 51.9.

Prism Johnson has announced the divestment of its entire 51 per cent stake in Raheja QBE General Insurance Company for Rs 2.9 billion by March’21. The divestment of the loss-making subsidiary would result in increased consolidated EBITDA from FY22E and lower debt. Besides, the company disclosed operational performance during the first quarter of FY21E which shows better performance by cement, while TBK/RMC still remains impacted.

Investment Rationale

The company was able to reduce standalone net debt by Rs 2.7 billion during Q1FY21 backed by improved collections across all three businesses.

Factoring lower growth in TBK/ RMC, the brokerage has cut its FY21E EBITDA by 18 per cent, while raising FY22E EBITDA by 9 per cent owing to divestment of loss making insurance subsidiary and increase our target price to Rs 52/share (earlier Rs 37) based on 6 times FY22E EV/E also aided by lower debt.

Segmental Revenues and EBITDA

Financials

For the quarter ended March 31, 2020, the company has reported consolidated sales of Rs 1463.15 crore, up 1.07 per cent from last quarter sales of Rs 1447.73 crore and down -15.58 per cent from last year's same quarter sales of Rs 1733.08 crore. The company reported net profit after tax of Rs -46.67 crore in the latest quarter.

Promoter/FII Holdings

Promoters held 74.87 per cent, while FIIs held 3.70 per cent, DII held 7.61 per cent, and public and others 13.82 per cent stake in the company as of March 31, 2020.