 "Prism Johnson zooms over 40% in 2 days, hits record high on heavy volumes")
Prism Johnson share price moved to a new all-time high for a second consecutive day, touching a record high of Rs 246.10 on Wednesday. The share price surged 18 per cent on the BSE in today's intraday trade amid heavy volumes.
In the past two trading days, the stock of the cement and cement products company has zoomed 41 per cent. On Tuesday, Prism Johnson stock had surpassed its previous high of Rs 198.90 touched on February 9, 2024.
At 01:24 PM, Prism Johnson was quoting 13 per cent higher at Rs 235.20 as compared to 0.06 per cent rise in the BSE Sensex. The average trading volume on the counter jumped nearly 10-fold today with nearly 78.55 million equity shares, representing 15.6 per cent of total equity of Prism Johnson, changing hands on the NSE and BSE.
With this, the BSE has sought clarification from Prism Johnson with reference to movement in volume. The reply is awaited.
Prism Johnson is one of India’s leading integrated building materials’ companies, with a wide range of products from cement and ready-mixed concrete to tiles and bathroom products. The company principally operates in three business segments: Cement, H & R Johnson (India) (HRJ), and Ready Mixed Concrete (RMC).
Prism Cement manufactures cement with the brand name 'Champion' and a premium quality grade of cement under brand names 'Champion Plus', 'Duratech' and 'Champion All Weather'. It caters mainly to markets of Central and Eastern Uttar Pradesh, Madhya Pradesh and Bihar, with an average lead distance of 389 kilometers in Q1FY25.
HRC offers end-to-end solutions of tiles, sanitary ware, bath-fittings and engineered marble and quartz. Its products are sold under several strong brands, viz. Johnson Tiles, Johnson Marbonite, Johnson Porselano, Johnson Endura, Johnson International and Johnson Marble & Quartz. Prism RMC is amongst the top three players in the ready-mixed concrete sector, with a pan-India presence with 108 plants (including franchisees for purchase of ready-mixed concrete) at 49 cities / towns.
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The management expects a strong medium-term outlook for cement demand in India led by demand from housing and infrastructure sectors; recent / upcoming capacity additions in Central India by other cement companies to intensify competition subject to healthy demand growth.
The construction materials sector is poised for growth in the near to medium-term, driven by the Government of India's initiatives and a surge in infrastructure, housing, and commercial projects. These developments present promising opportunities for Prism Johnson.
However, the company's growth prospects are closely linked to India's economic conditions. A decrease in demand could pose challenges to the company’s operations and financial performance. Additionally, competition from both organised and unorganised players in the building materials sector remains a potential threat, Prism Johnson said in its FY24 annual report.
Furthermore, Prism Johnson is well-positioned to capitalise on the growing demand for construction materials. However, it must remain vigilant and adaptable to address potential market challenges, it added.
Meanwhile, Prism Johnson’s 6.3 million square metres-greenfield tiles unit in Panagarh, West Bengal, which commenced operations in October 2023, is likely to ramp-up over FY25, adding to the earnings before interest, taxes, depreciation and amortisation (Ebitda). Furthermore, the company plans to strengthen its green power by increasing its renewable power capacity by 32MW (solar power: 8MW, wind power: 24MW), which is likely to be completed in FY25, improving cost efficiencies, India Ratings and Research (Ind-Ra) said.
Ind-Ra believes Prism Johson's annual capex is likely to be Rs 400-500 crore over FY25-FY26, which, coupled with a robust Ebitda generation, is likely to ensure a continued improvement in the net leverage. The rating agency expects the company to continue to witness a high single-digit demand growth in FY25, led by the housing and infrastructure segments in the central India markets.
Ind-Ra expects the profitability in FY25-FY26 to be supported by the cost savings arising from an increase in the proportion of green power (FY24: 29 per cent share of green power) with completion of the capex to set up an 8MW of additional solar power by June 2024 and a 24MW captive wind power by March 2025. However, any unexpected increase in fuel costs affecting the profitability would remain a monitorable.