Nirmal Bang Retains 'Buy' Rating On Nuvoco Vistas, Revises Target Price; Here's Why

Nirmal Bang Report

Nuvoco Vistas Corporation Ltd. plans to optimise its domestic presence, expand its regional reach, and increase revenue through product premiumization, as well as focus on many cost-cutting efforts. Government spending on infrastructure and an increase in housing demand are expected to boost the company's performance.

The company is trading at 6.6 times FY26E enterprise value/Ebitda, which is lower than the four-year average of 10.4 times (post listing in August 23, 2021).

We retain our "Buy" recommendation, valuing the business at eight times September FY26E EV/Ebitda with a revised target price of Rs 425.

Key risks to our assumptions:

1. Downside risks include delayed net debt to Ebitda ratio improvement to 2.5 times and strong debt-funded growth plans.

2. Upward risks include continued cash accrual growth, operational efficiency, synergies, and debt reduction, leading in net debt to Ebitda below 1.5 times.

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