23 Aug , 2021 By : Kanchan Joshi
Nuvoco Vistas shares on Monday made a weak debut on the stock exchanges by listing at a 17% discount to its IPO issue price. The cement manufacturer stock started trading at Rs471 as compared to the issue price of Rs570 apiece. Though, it recovered from the opening level and inched up to Rs531 apiece, down over 6% at close on the BSE.
“Nuvoco vistas debuted secondary market on a weak note due to weak market sentiments whereas valuations were also on the expensive side. Though the company has a strong market share with good brand names and financials are also decent. We have a bullish view on the infrastructure sector for the next 3-5 years, therefore, we expect the cement sector also to do well. If we talk about Nuvoco vistas then investors can hold this stock for the long term on the back of a bullish outlook on the sector and strong market share," said Santosh Meena, Head of Research, Swastika Investmart.
Earlier this month, the initial public offer of Nuvoco Vistas, part of the Nirma Group, was subscribed 1.71 times. The offer aggregating up to Rs5,000 crore had a fresh issue of up to Rs1,500 crore and an offer for sale of up to Rs3,500 crore. Proceeds of the fresh issue will be used for repayment of certain loans availed by the company and general corporate purposes.
"Nuvoco Vistas listing was less than stellar as the overall market conditions were not supportive. The uptick in utilisations and expected ~Rs200 improvement in EBITDA/Tonne over FY21-23E would enable the company to deleverage the balance sheet. Valuing at 11x FY23E EV/EBITDA and USD150 per tonne, in-line with other larger cement companies, the stock presents a good ~27% upside from current levels. Hence, long term investors that were not allotted shares may use this opportunity to initiate fresh position in the stock," said Milan Desai, Lead Equity Analyst, Angel Broking.
Nuvoco Vistas Corp, part of the Nirma Group, is the fifth-largest cement company in India. The company began its journey after acquiring the Indian cement business of Lafarge Holcim in 2016 for $1.4 billion. In 2020, it inked a $770 million deal to buy the cement assets of Emami Group.
The company's cement plants are located in West Bengal, Bihar, Odisha, Chhattisgarh and Jharkhand in east India and Rajasthan and Haryana in north India, while ready mix concrete (RMX) Plants are located across India. Currently, its cement plants have an installed capacity of 22.32 MMTPA, and it operates 49 RMX Plants.
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