Nuvoco Vistas Corporation, one of the largest cement companies in east India, disappointed investors on the debut, as it opened 17.4 percent down on August 23 in the worst listing of 2021.
After opening at Rs 471, which was also an intraday low, the stock recovered to touch Rs 550 but feel short of the issue price of Rs 570. Experts, however, have advised keeping the stock for the long term.
At the time of writing this copy, the stock was down by 5.61 percent at Rs 538 but gained 14.23 percent from the opening price on the BSE.
“Nuvoco Vista Corporation, a part of Nirma Group Company, is among one of the largest cement companies. It is good to hold for the long term. The outlook looks good to me in the long term for the cement sector and this company may do well in the long term. Therefore, this stock can be added to the portfolio for mid to long term," Gaurav Garg, Head of Research at CapitalVia Global Research told Moneycontrol.
Astha Jain, Senior Research Analyst, Hem Securities, also advised holding the stock for the long term. The company being the largest cement-manufacturing company in East India in terms of total capacity with market-leading brands and experienced individual promoter and a professional management team has strong future potential.
Nuvoco is also the fifth-largest cement manufacturer in India in terms of capacity, owning a capacity share of approximately 17 percent in East India, and 4.7 percent in North India and 4.2 percent. With a consolidated capacity of 22.32 million tonnes per annum, the company has 4.2 percent of the industry's installed capacity in India as of December 2020. It is also one of the leading ready-mix concrete manufacturers in India.
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The company also has waste heat recovery systems at all its integrated plants with a total capacity of 44.7 MW, solar power plants with a total capacity of 1.5 MW and captive power plants with generation capacity of 105 MW.
If non-allotted investors wish to buy on a listing day, it is better to wait and watch to accumulate at a better pricing range in the near future, Prashanth Tapse, VP Research at Mehta Equities advised.
"We are optimistic on overall Indian cement sector due to mega spending lined up for infrastructural and affordable housing space. Nuvoco Vistas is well placed to tap the growing demand as it is the fifth-largest cement company in India and the largest cement company in East India in terms of capacity," he said.
He believes that a strong parentage from Nirma Group, coupled with gradual product acceptance, will result in the improvement of realisations.
The Rs 5,000-crore initial public offering of the cement maker had seen a tepid response from investors during August 9-11 as it was subscribed only 1.71 times largely driven by qualified institutional buyers (QIBs). The issue had received bids for 10.7 crore equity shares against the IPO size of 6.25 crore equity shares.
The Nirma Group is a diversified conglomerate that manufactures products ranging from chemicals to detergents, soaps, healthcare products and real estate development. The Nirma Group forayed into the cement business in 2014 through a greenfield cement plant in Nimbol. Thereafter, as a part of the Nirma Group company have grown the cement businesses, through acquisitions such as the acquisition of the Indian cement business of LafargeHolcim in 2016 and in 2020 by acquiring NU Vista.
Earlier in February 2020, the company completed the merger of the cement undertaking of Nirma located at Nimbol, Rajasthan. As of March 2021, it had 11 cement plants, eight in the east and three in the north.Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.