Buy Prism Cement: Tulsian

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Buy Prism Cement: Tulsian

Buy Prism Cement, says Investment Advisor, SP Tulsian.

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ALSO READ See previous views by SP Tulsian See what other Experts & Brokerages are saying about Prism Cement See messages about Prism Cement Prism Cement BSE | NSE 01/06/12 Are Mutual Funds betting on Prism Cement?

Buy Prism Cement , says Investment Advisor, SP Tulsian .

Tulsian told CNBC-TV18, "Prism Cement has a two million tone cement plant at Satna in MP. If you see the past performance of the plant it has always been operating at a capacity utilization of 125%. If you go by the financial performance, I think FY10 will be having a topline of close to about Rs 1000 crore with a bottomline of about Rs 230-240 crore. With an equity base of Rs 300 crore for the company, the EPS is likely to be anywhere between Rs 7.50 to about Rs 8 for FY10. This company is setting up a new plant at Satna only with a capacity of 3.6 million tonne, which will be operational by December 2010."

He further added, "This company is holding 74% stake in Raehja QBE general insurance company limited and this company will going to start their general insurance business may be in next couple months or may be latest by 3 to 4 months time and that will infact add the huge value to the embedded or combined value of the company along with the cement. As I said the green field capacity costs about USD 70-80 per tonne for an efficient company like this and if you have once the capacity goes operational the secondary market gives a valuation or a discounting to the extent of about USD 150 to USD 160 per tonne."

"Once this plant will be operational, which will almost be increasing the capacity by 200% can take the valuations of the company to a great extent. Though my call has been very positive on the stock, I am expecting the stock to move to Rs 90 may be by the year end. The stock I think is now ruling at around Rs 61 but I have given the day target on the stock at Rs 65.50."

At 11:26 hrs the share was quoting at Rs 62.85, up Rs 1.45, or 2.36% with volumes of 1,349,807 shares. Yesterday the share closed up 9.16% or Rs 5.15 at Rs 61.40.

The company touched its 52 week high Rs 62.25 and 52 week low Rs 26.40 on 07 Apr, 2010 and 08 Apr, 2009, respectively. Currently, it is trading 0.96% below its 52-week high and 138.07% above its 52-week low. Market capitalisation stands at Rs 1,874.50 crore.

The company's trailing 12-month (TTM) EPS was at Rs 6.75 per share.  The stock's price-to-earnings (P/E) ratio was 9.31. The latest book value of the company is Rs 22.18 per share. At current value, the price-to-book value of the company was 2.83. The dividend yield of the company was 2.39%.