1. Prism Cement Ltd. ….Niche focused play

2. Investment rationale Prism is a niche player in central / north region where strong demand is witnessed Operates one of the largest single kiln plant at Satna (MP) plant with annual capacity of 2.0 mt Operationally efficient player. Plant utilisation >100% for past 2 years Though small in size, it positions itself as focused quality conscious player

3. Growing capacity - volume driver in buoyant market Prism plans to enhance capacity from current 2.0 mt to 10.4 mt by FY11 Is setting up 3.6 mt plant adjacent to is existing Satna plant (MP) to be commissioned by Q3FY10 Also working on another plant at Kurnool (AP) with 4.8 mt where land acquisition has already taken place. Other approvals are being sought. Plant to be ready by FY11

4. Consolidation: higher earnings growth Higher earnings growth visibility as Group’s tiles and RMC businesses to be amalgamated with Prism. Optimum utilisation of group resources and synergies work for the merged entity Economies of scale, reduction in overheads, managerial, admin exps would provide cost side relief Ease of fund raising ensure timely capacity expansions for Prism Multiple revenue streams assure strong revenue visibility Overall would have positive impact on EPS pf company

5. Allotment of coal mine: Prism has been allotted a coal block in Chindwara district ( MP). Mining plan approved by Central Govt. would ensure seamless coal supply and reduced coal costs. Once operational coal mines to last for at least 20 years

6. Earnings growth ahead.. Key dataFY09 (9M)FY10PFY11P Revenues62991053019968 EBITDA172528074869 OP margin27.326.624.4 PAT96216663031 NP margin15.315.815.2 EPS3.235.5910.16

7. Key risks.. Pricing pressure Higher cost of funding Delay in capacity commissioning Success in merged entity operations

8. Buy Prism.. At CMP of Rs 56.55 stock trades at 5.56 x FY11E Buy Prism with price target of Rs 71 ( 7 x FY11E)