The initial public offering (IPO) of Nuvoco Vistas Corporation was subscribed 1.71 times on August 11, the final day of bidding.
The offer has received bids for 10.70 crore equity shares against an IPO size of 6.25 crore equity shares. The reserved potion of qualified institutional buyers was subscribed 4.23 times, and that of non-institutional investors saw 66 percent subscription.
Retail investors have put in bids for 73 percent of their reserved portion.
The cement major plans to mobilise Rs 5,000 crore through its public issue, of which Rs 1,500 crore has already been raised from anchor investors on August 6, a day prior to issue opening, at the higher end of the price band of Rs 560-570 per share.
Nuvoco shares were trading at a premium of only Rs 10 in the grey market. This equates to a trading price of Rs 580 over the upper band offer price of Rs 570, the IPO Watch data showed.
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It has a market share of 4.2 percent in terms of cement production capacity in India, 17 percent share in East India and 5 percent in North India as of December 2020. The company is also one of the leading ready-mix concrete manufacturers in India with 49 plants.
Nuvoco Vistas has 11 cement plants (8 in East India and 3 in North India), having an installed capacity of 22.32 million tonnes per annum (MMTPA) as of March 2021 Its plants have waste heat recovery systems at all the 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.
Also read - Nuvoco Vistas Corporation IPO opens: Should you subscribe?
Considering the growth prospects in light of affordable housing push to meet PMAY (Pradhan Mantri Awas Yojna) for all by 2022, planned expansion, integration of NU Vista, lowering debt and other cost control measures, Ashika Stock Broking recommended to 'subscribe' the issue for long term perspective.
In terms of the valuations, on the higher price band, Nuvoco Vistas demands EV/EBITDA multiple of 16.6x based on FY21 post issue fully diluted equity, which is reasonably priced when compared to its listed industry peers, said the brokerage.
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In FY21, revenue and EBITDA (earnings before interest, tax, depreciation and amortisation) grew by 10.2 percent and 12.6 percent respectively, aided by robust cement demand and acquisition of Emami Cement.
Over FY18-21, Nuvoco Vistas EBITDA grew at 11 percent CAGR (though revenue was flat at 3 percent CAGR), supported by margin expansion of 395bps to 19.5 percent. Despite healthy operational performance, higher depreciation and interest cost has led to inconsistent performance at the PAT level. With the repayment of debt from the IPO proceeds and synergy benefits playing out from the recent acquisition, the profitability is expected to improve going ahead, said Ashika Stock Broking.
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