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Nuvoco Vistas files DRHP for Rs 5,000 crore IPO; marks capital markets comeback by Karsanbhai Patel-backed Nirma

Nuvoco Vistas has acquired the assets of Lafarge India and Emami Group and is present in the fast growing regions of east and north India. It competes with pan-India players like Ultratech Cement, Dalmia Bharat and Shree Cement.

May 06, 2021 / 06:51 PM IST
Karsanbhai Patel’s son Hiren Patel is the chairman of Nuvoco Vistas Ltd and is seen as the change agent at the low-profile Nirma Group who has led its diversification and acquisition strategy in recent years.

Karsanbhai Patel’s son Hiren Patel is the chairman of Nuvoco Vistas Ltd and is seen as the change agent at the low-profile Nirma Group who has led its diversification and acquisition strategy in recent years.

Billionaire industrialist Karsanbhai Patel-founded Nirma group, which became a household name due to its iconic detergent brand, is making a big-bang return to the domestic capital markets.

Nine years after delisting Nirma Ltd from the stock exchanges, the Ahmedabad-based group’s cement arm Nuvoco Vistas Corporation Ltd has filed its DRHP (draft red herring prospectus ) with Sebi to raise around Rs 5,000 crore through an initial public offer (IPO), sources with knowledge of the matter told Moneycontrol.

The move is a significant one for the sector as it will end a nearly 14 year glut of cement listings for India Inc with the last one coming from Burnpur Cement in November 2007.

Much like the way Nirma shook up MNC’s like HUL in its heydays in the detergent segment, Nuvoco Vistas has stunned the domestic cement sector with its aggressive M&A strategy in the past five years. In 2016, the group acquired the prized Indian assets of LafargeHolcim for $1.4 billion, outbidding heavyweights like the JSW Group and the Piramal Group. In February, 2020, it inked a $770 million deal to purchase the cement assets of the debt-ridden Emami group.

"The DRHP has been e-filed with the market regulator with a primary component of around Rs 1,500 crore and a secondary component of around Rs 3,500 crore. The promoters believe Nuvoco Vistas has achieved sufficient scale and hence can be independently listed,” said one of the individuals cited above. The firm’s overall capacity currently is around 20 million tonnes per annum ( mtpa), this individual elaborated.


According to the firm’s FY 19-20 annual report, it had a cumulative production capacity of around 14mtpa with 7 cement plants and 60 ready mix concrete plants. Nuvoco Vistas, which is present in the fast-growing regions of east and north India, competes with pan-India players like Ultratech Cement, Dalmia Bharat and Shree Cement.

“This is a big offering in the cement sector after a very long gap. The IPO is aiming for a valuation of around Rs 40,000 crore for the entire firm, which will command multiples compared to some of its heavyweight listed peers,” added a second individual.

“The firms plants are strategically located with good road and rail connectivity and are in close proximity to raw materials,” he elaborated.

Burnpur Cement raised Rs 26 crore via its IPO in 2007. The year saw two other cement listings as well from Barak Valley Cements and Binani Cement which raised Rs 23 crore and Rs 153 crore, respectively according to Prime Database.

“The proceeds of the IPO will be used for repayment of debt from the twin acquisitions and strengthening the capital structure of the firm, which is set for solid growth in the next few years. Commodity prices are rising and the infra spend of the government is a good plus for such an offering,” said a third individual.

The tentative plans as of now are to launch the IPO either in June or July, this individual added. As of March 2020, Nuvoco Vistas had borrowings of Rs 4,463 crore.

According to the DRHP, investment banks ICICI Securities, Axis Capital, JP Morgan, HSBC Securities & SBI Capital are working as advisors on the IPO. Shardul Amarchand Mangaldas is the company counsel and Trilegal is the counsel to the bankers.

All the three individuals above spoke to Moneycontrol on the condition of anonymity. Moneycontrol could not immediately connect with the bankers and law firms for a comment. We are awaiting the response to an email query sent to Nuvoco Vistas Ltd and will update this article as soon as we hear from the firm.

“ Nuvoco’s strengths are its critical size, dominance in the eastern market and established brand in slag cement which provides higher margins,” says Ashutosh Maheshvari, CEO of corporate finance and m&a advisory firm IMAP India. “ It’s acquisitions were made at a high premium and thus return metrics on equity may take longer to catch up with peers,” he added.

Analysts expect the cement sector to report strong double-digit volume growth during Q4FY21 given the low base and sharp recovery in cement demand led by higher government spending and a strong rural economy. Hyderabad-based Penna Cement is also likely to re-file its DRHP with Sebi later this month.


Karsanbhai Patel’s son Hiren Patel is the chairman of Nuvoco Vistas Ltd and is seen as the change agent at the low-profile Nirma Group who has led its diversification and acquisition strategy in recent years. He joined Nirma Limited in 1998 as a Director and took over as its Managing Director in 2006. Under his leadership, the group has grown from being primarily in the consumer goods business to becoming a diversified conglomerate present in chemicals, cement, real estate and healthcare. Patel is an active philanthropist and a member of the Managing Committee of Nirma Education & Research Foundation, which runs the Nirma University.

“As the pandemic wreaked havoc around the world, lockdowns were imposed, causing severe disruptions across supply chains. The cement industry, however, showed resilience despite multiple challenges. It has continued to grow at a sustained pace over the past few years on account of increased investments in the infrastructure space. With an aim of making India a $5-trillion economy by 2025, the government continues to focus on infrastructure development,” Hiren Patel said in the firm’s FY19-20 annual report.

“The building materials industry plays a pivotal role in India’s infrastructure growth and with major initiatives like the Smart City projects, Pradhan Mantri Awas Yojana (aimed at offering affordable housing for all by 2022), construction and repair of roads, bridges, highways and development of industrial hubs in different parts of the country, the sector remains poised to witness an upward trajectory in the days ahead,” he added.

Jayakumar Krishnaswamy is the Managing Director of Nuvoco Vistas and he has had previous stints at AkzoNobel India, HUL, Lafarge India and Eicher Tractors.


According to the FY 19-20 annual report - revenue from operations stood at Rs 6,793 crore in FY 2019-20, in comparison to Rs 7,053 crore in FY 2018-19; while EBITDA grew by 39 percent from Rs 957 crore in FY 2018-19 to Rs 1,334 crore in FY 2019-20; recording a margin of 20 percent. The firm reported a PAT of Rs 249 crore, rising sharply from Rs 24 crore in FY2018-19.

Nuvoco Vistas has three business verticals namely, cement, ready-mix concrete and modern building materials.

The cement segment offers premium products like Concreto, Duraguard, Nirmax and Infracem. Nuvoco Vistas has cement plants across Chhattisgarh, Rajasthan, Haryana, Jamshedpur and West Bengal.

The ready-mix business offers specialised products like Artiste and InstaMix which have been used in projects like Lodha World One, Amritsar Entry Gate, and the Metros (Delhi, Jaipur, Noida and Mumbai).On the other hand, the modern building materials product range under the Zero M and InstaMix brands comprises construction chemicals, multipurpose bonding and waterproofing agents, wall putty, tile adhesive, ready mix dry plaster and cover blocks.
Ashwin Mohan
first published: May 6, 2021 04:08 pm

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