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ICICI Securities Report
Nuvoco Vistas Corporation Ltd., led by Dr. Karsanbhai Patel Nirma group, has emerged as the fifth largest cement group in India and is amongst top-3 in East region with 23.8 million tonne capacity (as of September 2021), post 8.3 million tonne acquisition of NU Vista (earlier Emami Cement) in July 2020.
We believe cost synergies from the said acquisition, improved cost efficiencies, higher premiumisation coupled with scale benefits and operating leverage may drive ~30% (Rs 265/te) blended Ebitda/te rise to Rs 1,180/te over FY21-FY24E.
Valuation at 8.6xFY24E EV/E or U.S. $125/te adequately factors concerns around higher East region concentration, higher leverage and lower profitability versus peers, in our view.
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