Buy Prism Cements for long term profit

Prism Cements has announced the quarterly results. The profit has increased by 114%. The profit for the quarter ended Mar'06 is Rs 24.39 Crores (EPS: 0.82). For the quarter ended Dec'05, the profit was Rs3.35 crores. (EPS: 0.11). For the quarter Jan 05- Mar-05, the profit was 11.35 crores(EPS: 0.38). The profit has almost doubled in Jan-Mar quarter in 2006 when compared to the same quarter in 2005.

Since a long summer is waiting in the calendar, we can expect the huge increase demand, there by increasing the sales (and also the cement price). I am expecting the profit for the next quarter to be atleast Rs 28 Crores. This leaves the EPS of 0.93.

Hence the net EPS for the year will be 0.93+0.82+0.11-0.04 = 1.82.
The current market price of prism cements is Rs42.90/
The P/E will be 42.90/1.82 = 23.57.

This is fairly a cheap price for the cement sector stocks. Also the cement sector has a good growth prospect as the real estate business is booming up in India, lots of new roads, buildings, bridges and flyovers are being planned.

Have a look at quarterly results of Prism Cements as reported to BSE India. Also have a look at the cumulative annual results for the year Apr 2004- Mar 2005


Company Results

Scrip Code : 500338 Company Name : Prism Cement Ltd

Type UnAudited UnAudited UnAudited UnAudited UnAudited Date Begin 01 Jan 06 01 Oct 05 01 Jul 05 01 Apr 05 01 Jan 05 Date End 31 Mar 06 31 Dec 05 30 Sep 05 30 Jun 05 31 Mar 05 Description Value(Rs. million) Gross Sales 1974.7 1531.3 1211.2 1679.2 1244.6 Excise Duty -303.7 -258.9 -218.9 -261.8 -218.9 Net Sales 1671 1272.4 992.3 1417.4 1025.7 Other Income 3 6.3 7.3 4.8 -1 Total Income 1674 1278.7 999.6 1422.2 1024.7 Expenditure -1154.8 -1077.7 -882.2 -1057.8 -747.2 Operating Profit 519.2 201 117.4 364.4 277.5 Interest -67.1 -67.9 -51.4 -50.5 -45.3 Gross Profit 452.1 133.1 66 313.9 232.2 Depreciation -83.1 -83.1 -82.6 -85.1 -75.5 Profit before Tax 369 50 -16.6 228.8 156.7 Tax -125.1 -16.5 3.6 -96.6 -43.2 Profit after Tax 243.9 33.5 -13 132.2 113.5 Net Profit 243.9 33.5 -13 132.2 113.5 Equity Capital 2982.5 2982.5 2982.5 2982.5 2982.5 EPS 0.82 0.11 -0.04 0.44 0.38 Nos. of Shares - Non Promoters 113435511 113655511 113655511 113333011 113333011 Percent of Shares - Non Promoters 38.03 38.11 38.1 38 38 Result Type Q Q Q Q Q

Share holding pattern:

FII and Mutual Funds:
As on 31 Dec 2005, only 0.31% of the shares are holded by FII's and MF's. Prism Cements is a Penny Stock, this may be the reason for the huge investors to get in to the Prism Cements. Now the stock price has increased from Rs 24/ to Rs 42/ in 2 months, this has the momentum for the short term investors to get into, and once the penny stock label is thrown away, the MF and FII's may get in. This will surely increase the share price.

Promoters Shares:
Currently the promotors hold around 61% of the shares of Prism Cements. If the promotors decide to dilute their hold on its shares, then the share price may come down. Although there is a very little chance of any thing like this happening in the near future, I wanted to warn you about the little risk in it. Even if such a thing happens, the gitter in the price will only lost for a very short term.

Considering the growth prospects and the current increase in the profit, I am rating it a BUY for a long term profit.

Happy Trading.