Accumulate Nuvoco Vistas Corporation; target of Rs 384: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on Nuvoco Vistas Corporation with a target price of Rs 384 in its research report dated May 03, 2024.

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May 03, 2024 / 12:21 IST

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Prabhudas Lilladher's research report on Nuvoco Vistas Corporation

Nuvoco Vistas (NUVOCO) reported strong operating performance in 4Q, led by sharp 34% QoQ volume growth. EBITDA per ton of Rs918 was higher than PLe of Rs875/t led by lower P&F and other expenses. Post witnessing flat volume growth in FY24, expectation of improvement in demand from key markets (WB, JH and BH) post elections should aid volume growth in next two years as company has adequate capacity in East. Cost optimization measures such as railway sidings, long term RM contracts etc. are expected to add Rs50/t to EBITDA per ton in FY25E. Recent small increase in prices can aid further margin expansion. However, further delay in capacity expansion is expected to result in market share loss in Eastern region as East is expected to witness maximum capacity additions over next few years. We expect NUVOCO to deliver 11% CAGR in EBITDA over FY24-26E on flat price assumptions.

Outlook

The stock is trading at EV of 8.5x/7.1x FY25E/FY26E EBITDA. Maintain ‘Accumulate’ with revised TP of Rs384 (earlier Rs376) valuing at 8x EV of Mar’26E EBITDA.

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