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Accumulate Prism Cement – HDFC Sec

September 10, 2007

Prism Cement Limited [PCL] is an ISO 9001:2000 certified company promoted by Rajan Raheja Group. PCL manufactures and markets Portland Pozzollana Cement (PPC) with the brand name ‘Champion’ and full range of Ordinary Portland cement (OPC) of 33, 43 and 53 Grades.

PCL has planned to undertake a massive expansion plan, wherein PCL has envisioned a Brownfield expansion at Satna of 2 mtpa Clinker expected to come on stream by 2010. This would offer locational advantage, as the demand is very strong in North and growing at a good rate. For the last quarter ended June 07, PCL witnessed another high in its operating margins recording 50.6%, best in the industry. PCL’s Satna plant is at a prime location, near to well-known thermal plants like NTPC, MPSEB, IFFCO, Hindalco, etc. which provides a rich source of fly ash used in manufacturing of PPC.

Key demand drivers include big surge in real estate build-out for housing & commercial purposes by developers such as DLF, Unitech, Parsvanath, Omaxe etc., Commonwealth Games 2010 related Capex, Major scale-up in Hydro power and Infra Capex across North & Central India.

PCL will hold a 74% stake and the Australian group will hold the rest in proposed Insurance joint venture. One could look at accumulating Prism Cement in the Rs 53-61 band for 30-40% gain in a year’s time.

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