'Buy' Maintained On Nuvoco Vistas By HDFC Securities; Sees Long-Term Growth Story To Be Intact

The Vadraj acquisition at $60/million tonne is below Nuvoco’s current valuation of ~$76/mt and the timely commissioning of the plant will enhance volume growth visibility (7-8% CAGR) beyond FY27E..NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..HDFC Securities Institutional Equities.We maintain a Buy rating on Nuvoco Vistas Corporation Ltd. but keep the target price unchanged at Rs 420/share (nine times its Mar-27E consolidated Ebitda). The company announced the acquisition of Vadraj Cements in Gujarat (6 million metric tonne capacity) for an effective cost of $60/mt versus Nuvoco’s current valuations of $76/mt and below recent M&As at >80/mt. With a total capex outgo of Rs 30 billion during FY26-27E, Nuvoco expects to commence production from the plant in Q3 FY27E, thus increasing its consolidated capacity to 31 mnmt. This acquisition-ensures volume growth visibility beyond FY27E, enhances Nuvoco’s regional sales mix andputs to rest qualms about it being a sell-off candidate..The acquired plant has large high-quality limestone reserves, good local availability of low-cost lignite (as fuel), captive jetty (for coastal shipping) with option to set-up railway sidings. As Nuvoco is already selling ~1 mmt (5% of its total volumes) in Gujarat (from its Rajasthan plant), Vadraj ramp-up will free up Nuvoco’s capacity in the north which in turn will be used to gain market share in the that region. We estimate that capex outgo and net debt will increase in FY26-27E, led by this expansion. However, we estimate cement prices and profitability will rebound FY26E onwards, which should reduce consolidated net debt to Ebitda ratio to 2.1x in Mar’27E versus 3.2x in Sep’24..Click on the attachment to read the full report:.Cement Q3 Results Preview - Pricing Pressure To Continue; ACC, Shree Cement To Outperform The Pack: DRChoksey.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

'Buy' Maintained On Nuvoco Vistas By HDFC Securities; Sees Long-Term Growth Story To Be Intact

Nuvoco's valuations are attractive, given low-cost acquisition and improving volume growth visibility, says the brokerage.

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