Accumulate Nuvoco Vistas Corporation; target of Rs 374: Prabhudas Lilladher

Prabhudas Lilladher's research report on Nuvoco Vistas Corporation

Nuvoco Vistas (NUVOCO) reported a robust operating performance in Q4FY25, driven by 6.6% YoY volume growth and a strong uptick in cement pricing in key markets, supported by increased government spending. Pure cement NSR rose 5% QoQ, aided by price increases in the eastern markets during Q4FY25. As per mgmt., April prices are higher by Rs8–10/bag, which is expected to support Q1FY26 NSR. Operating costs declined due to softer pet coke and coal prices, along with operational efficiencies. Further savings of Rs100–150/t over the next 2–3 years are expected through continued cost initiatives such as railway sidings and WHRS utilization. Post receiving NCLT approval for Vadraj acquisition, Nuvoco is now focused on restarting the assets by Q3FY27. It also plans to incur an incremental Rs3bn to set up a 2mtpa GU in Kutch over the next 18 months. An upfront payment of Rs18bn is expected in Q1FY26, followed by Rs12bn in refurbishment capex for the 3.5mtpa clinker unit at Kutch and 6mtpa GU at Surat over the next 24–30 months. Mgmt. expects to commission the 2mtpa GU and clinker unit in Kutch by the end of Q3FY27, with cement volume contribution of ~0.3–0.4mt in FY27E.

Outlook

We raise FY26/27E EBITDA estimates by 2%/3% on higher pricing assumption and expect EBITDA to grow ~19% CAGR on a weak base over FY25-27E. The stock is trading at EV of 10.4x/8.4x FY26E/FY27E EBITDA. Maintain ‘Accumulate’ with revised TP of Rs374 (earlier Rs357) valuing at 9x EV of Mar’27E EBITDA (8x earlier).

For all recommendations report, click here