Prabhudas Lilladher's research report on Nuvoco Vistas Corporation
Nuvoco Vistas (NUVOCO) reported strong operating performance in Q1FY26, led by higher pricing and 6% YoY volume growth. Pure cement realization grew by 5.5% QoQ, driven by price hikes taken in the eastern region since Mar’25. Operating costs declined due to lower RM costs (long-term contract for slag) and optimized fuel mix. This led to EBITDA/t increasing by 42% YoY to Rs1,019. The management will continue its efforts to reduce operating costs by Rs50/t in FY26 led by higher WHRS, higher AFR and lower lead distance under its Project Bridge. NUVOCO has 75% of its capacities in the East, where prices have improved in anticipation of increase in demand since Feb’25. Although monsoon-led weakness in demand is expected to hamper pricing till Sep’25, we believe price fall may not be as sharp as last year due to expectation of higher GoI infra capex and improving rural demand.
Outlook
We raise FY26/27E EBITDA estimates by 9%/7% on higher pricing assumption and expect EBITDA to grow at 24% CAGR on a weak base over FY25-27E. The stock is trading at EV of 9.5x/8.5x FY26E/FY27E EBITDA. Maintain ‘Accumulate’ with revised TP of Rs422 (earlier Rs381) valuing at 9x EV of Mar’27E EBITDA.
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