Last updated on August 12th, 2021 at 03:45 pm
Nuvoco Vista Corporation Limited IPO- Fundamental Analysis
Nuvoco Vistas Corp. Ltd, a Nirma Group company, started operations in India in 1999 via acquisitions. Nirma Group entered cement business in 2014 through a greenfield cement plant in Nimbol. Thereafter, the Group has grown the cement business, through the acquisition of the Indian cement business of LafargeHolcim in 2016 and NU Vista (formerly Emami Cement Limited) in the year 2020.
Nuvoco Vistas Limited is coming up with IPO amounting to Rs500 crore.
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| Offer Details | |
| Offer Size | Rs 5000 crore |
| of which | |
| Fresh Issue | Rs 1500 crore |
| Offer for sale | Rs 3500 crore |
| Price Band | Rs 560-Rs 570 per share |
| Offer Period | Aug 9- Aug 11, 2021 |
| Offer Structure | QIBs: upto 50% of the offer NIIs: upto 15% of the offer RIIs : upto 35% of the offer |
| Market Lot | Minimum 1 lot; 26 shares (Rs 14,820) Maximum 13 lots; 338 shares (Rs 1,92,660) |
| Listing on | BSE, NSE |
| BRLM’s | ICICI Securities, Axis Capital, HSBC, JP Morgan, SBI Capital Markets, |
| Registrar | LinkIntime |
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Objects of Nuvoco Vista Corporation Limited IPO
- Repayment/prepayment/redemption, in full or part, of certain borrowings availed of by the Company (Rs 1350 crore)
- General corporate purposes
As of March 31, 2021, Nuvoco has 11 Cement Plants (eight in East India and three in North India). The Cement plants are in the states of West Bengal, Bihar, Odisha, Chhattisgarh, and Jharkhand in East India and Rajasthan and Haryana in North India, while RMX Plants are located across India. As of March 31, 2021, the cement plants have an installed capacity of 22.32 MMTPA. Three of the plants in East India are integrated units and five plants are grinding units. As of March 31, 2021, the company operates 49 RMX Plants which are in key states in India, enhancing the pan-India presence.
Nuvoco distributes its products through the trade segment, which mainly caters to individual home buyers (“TradeSegment”), and the non-trade segment, which is mainly via direct sales to institutional and bulk buyers (“Nontrade Segment”). The focus is on the Trade Segment, where the distribution channels are a mix of wholesale and retail dealers and a sub-dealer network. The Issuer has developed strong relationships with channel partners over the years.
The company offers a range of over 50 products across cement, RMX and modern building materials.
The product portfolio comprises of
Cement
The cement portfolio includes different types of Cement like Ordinary Portland Cement (OPC), Portland Slag Cement (PSC), Portland Pozzolana Cement (PPC), and Portland Composite Cement (PCC). The company has leading brands with multiple products under each brand including Concreto, Duraguard, Premium Slag Cement, Nirmax, Double Bull, Infracem, and Procem.
Ready Mix Concrete (RMX)
Portfolio in ready-mix concrete business includes Concreto, Instamix, Artiste, and X-Con range of
products. This portfolio includes products such as self-compacting concrete, decorative concrete, ready-to-use concrete, crack-resistant concrete, concrete with steel fibers, and lean concrete, as well as concrete with varied characteristics for specialty uses.
Modern Building Materials
Products under this category include a range of construction chemicals, tile adhesives, wall putty, dry plaster, cover blocks, and ready-mix dry concrete. Our modern building material products are marketed and sold under the “Zero M” and “Instamix” brands. Modern building material products are a key differentiator for the company.
Financial Analysis of Nuvoco Vista Corporation Limited
- The financial performance of Nuvoco Corp appears to be weak with volatile toplines and losses after tax for FY21. The revenues increased by 10% in FY21 on account of the acquisition of NU Vista Limited in July 2020, which led to the consolidation of its income to our total income for the period from July 14, 2020, to March 31, 2021. However, the company’s sales continue to get affected by covid 19.
- EBITDA margins for the company are strong throughout the three fiscals being 20% for FY21 and FY20 respectively. However, Nuvoco has posted losses after tax of Rs (25.92) crore in FY21 and Rs (26.40) crore in FY19.
- Net profit margins were (0.34%), 3.65% and (0.37%) foe FY21, FY20 nand FY19 repectively.
- Debt to equity is high at 1.19x as on 31st March 2021. Return on net worth is negative, being (0.35%).
- The Issuer has negative P/E considering EPS of -0.82 as on 31st Mar 21. However, the Issue is highly priced at 204x taking average EPS of 2.79 for the last three fiscals calculated at an upper price band of Rs 570 per share.
- P/BV is 2.45x at NAV of Rs 232.43 as on 31st Mar 21.
Ultratech Cement, ACC Cement, Shree Cement, and Ambuja cement are the peers of Nuvoco as per the RHP.
Investment Strategy
Nuvoco is associated with the Market-leading brand, Nirma Group that establish and enhance its leadership as a building materials company with strong brand recognition. The Issuer offers quality products in cement, RMX, and modern building materials. The Issuer expects to drive growth in its business and operations from acquisitions and, in particular, the recently concluded acquisition of NU Vista.
Looking at the cement sector, the demand would increase as government raises its infra spending. However, that growth is expected over a longer-term horizon. Considering the financials which are at a weaker side and the debt levels are also higher for the company. The company might take some time to recover from the covid effects and record positive net margins. Hence considering the above factors, one may avoid subscribing to this IPO.
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Subscription Status of Nuvoco Vista IPO
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| Subscription Status {no. of times (x)} | ||||
| Particulars | Shares Offered | 9th Aug | 10th Aug | 11th Aug |
| QIB | 1,78,57,143 | 0.00 | 0.11 | 4.23 |
| NII | 1,33,92,858 | 0.01 | 0.04 | 0.66 |
| Retail | 3,12,50,000 | 0.31 | 0.51 | 0.73 |
| Employees | ||||
| Total | 6,25,00,001 | 0.16 | 0.29 | 1.71 |
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Disclaimer: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date.
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