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