Hold Nuvoco Vistas Corporation: target of Rs 400: ICICI Securities

ICICI Securities recommended hold rating on Nuvoco Vistas Corporation with a target price of Rs 400 in its research report dated July 19, 2025.

Broker Research

July 23, 2025 / 14:44 IST

Hold

26 Aug, 2025 12:21

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ICICI Securities's research report on Nuvoco Vistas Corporation

Nuvoco Vistas Corp’s (Nuvoco) current valuation (of 8.5x FY27E EV/EBITDA) appears quite compelling. Further, buoyant cement prices were instrumental in propelling its Q1FY26 EBITDA by an impressive 51% YoY (being 5% ahead of our estimate). And to boot, sector tailwinds (essentially, easing competitive intensity) are driving ~8% of upward revision to our EBITDA estimates for FY26/FY27 – with scope for further uptick, should cement prices stay firm in Q2FY26. Yet, we recommend caution on the stock given leverage concerns – amplified by Nuvoco’s recent acquisition of Vadraj Cement (Vadraj: cost of acquisition and refurbishment sums up to ~INR 36-37bn, which may keep debt elevated). While Nuvoco has guided to raise INR 12bn via the issuance of CCPS/CCDs, we view this as quasi-debt.

Outlook

With the acquisition’s benefits likely to accrue mainly in FY28 and our estimate of a subdued RoE (~5%) in the interim, we see little merit to argue in favour of a higher valuation multiple (of ~9x FY27E EV/EBITDA). Maintain HOLD with a revised TP of INR 400 (INR 360 earlier).

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