Crisil Ratings stated that the rating reflects the healthy business risk profile supported by PJL’s position as a prominent cement player in the central region, its established presence in the domestic ceramic and vitrified tiles industry along with being one of the leading players in the ready-mix concrete (RMC) business and structural improvement in the operating efficiency of the Cement and HRJ Divisions.
The rating also factors in the healthy liquidity and financial risk profile maintained.
These strengths are partially offset by susceptibility to fluctuations in input costs and realisations, cyclicality in the industry and exposure to intense competition.
The agency further said that a weakening of the financial risk profile, with the net debt-to-EBITDA ratio remaining above 4 times, could exert downward pressure on the rating.
Lower-than-expected liquidity, either due to a low cash balance or high utilisation of fund-based limits, may also weigh negatively.
A slower-than-expected turnaround in profitability across the Cement, HRJ, and RMC divisions and large debt-funded capital expenditure that exposes the company to project risks could lead to a rating downgrade.
Prism Johnson is an integrated building materials company, with a wide range of products such as cement, RMC, tiles and bath products. The PJL group currently has three divisions - Cement, HRJ, and ready-mix concrete (RMC). Further, it has a 51% stake in its general insurance subsidiary, RQBE General Insurance Company (RQBE).
The scrip advanced 0.70% to currently trade at Rs 151.05 on the BSE.