The Hindu Business Line : Prism Cements: Buy

Investors can buy this stock from a one-to-two year perspective to capitalise on likely gains linked to its participation in the consolidation processes. The fundamentals are also acquiring a healthier hue.

As a better balance emerges between demand and supply, the cement sector is poised to figure prominently in investor preferences. During such periods, the consolidation process, too, gets a boost.

With its contemporary 2-million tonne capacity, Prism Cements will be eyed by both global majors seeking a presence in India and domestic players such as Grasim and Gujarat Ambuja.

As it has a strong promoter, the Rajan Raheja group, a major player in the construction sector which could negotiate an attractive exit price, the process may be delayed to get higher value. There have been no indications of plans to expand capacities or grow through acquisitions.

Securing finance for any such an exercise will also be tough. This aspect too points to Prism Cements becoming a part of the consolidation process. We have buy recommendations outstanding at prices between Rs 9 and Rs 13, and maintain our bullish stance.

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