'Buy' Nuvoco Vistas Shares Maintains Nirmal Bang Post Q1 Results, Hikes Target Price — Here's Why

The acquisition of Vadraj will increase Nuvoco Vista’s capacity from the current 25 mtpa to a total of 31 mtpa by Q3 FY27. This transaction is a strategic value buy and will be funded without a significant increase in the company’s consolidated debt levels.

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Nirmal Bang Report

Nuvoco Vistas Corporation Ltd.'s revenue, Ebitda, and PAT Growth CAGR during FY25- FY27E stands at 10%, 24%, and 351%, respectively. We remain positive on the company for the following reasons:

Operational efficiency: Initiatives such as Project SPRINT and Project BRIDGE are delivering tangible cost benefits. Notably, Project BRIDGE has achieved savings of Rs 86/tonne through targeted efforts in power and fuel cost optimization, reduction of material losses via enhanced quality control, and process discipline, as well as by minimizing damages and increasing direct dispatches.

Deleveraging and balance sheet strengthening: The company has reduced its net debt by Rs 8.8 billion, bringing it down to Rs 34.7 billion. Post transaction, it aims to maintain a net debt range of Rs 35-40 billion. The debt structure comprises Rs 6 billion of long-term borrowings and Rs 12 billion in CCPS (Compulsorily Convertible Preference Shares), which are expected to be converted into equity over the next two-three months, thereby further strengthening the balance sheet.

The company is currently trading at 8.1x FY27E EV/Ebitda, below the three-year average of 10.8x.

We maintain a ‘Buy’ recommendation on the stock. The multiple values the business at 8.9x Jun-27E EV/Ebitda to sustain the target price of Rs 469.

Key downside risks:

• The combination of intense heat and the onset of the monsoon season may temporarily slow industrial activity, potentially dampening short-term growth across key sectors.

• A tight supply of slag, particularly in Eastern India, coupled with rising prices, is exerting pressure on input costs and could impact industry margins in the near term.

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