Nuvoco Vistas Corporation Limited

Incorporate in 1999, Nuvoco Vistas Corporation Limited is the fifth largest cement company in India and the largest cement company in East India in terms of capacity. This is a company from Nirma group owner Mr Karsanbhai Patel. As of December 31, 2020, company's cement production capacity constituted approximately 4.2% of total cement capacity in India, 17% of total cement capacity in East India and 5% of total cement capacity in North India, and the company are one of the leading ready-mix concrete manufacturers in India. Company's 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 company's RMX Plants are located across India. As of March 31, 2021, their Cement Plants have an installed capacity of 22.32 MMTPA. They have eight Cement Plants located in East India and three in North India. Three of its plants in East India are integrated units and five plants are grinding units. Two of its plants in North India are integrated units and the third is a blending unit. They have waste heat recovery systems at their integrated plants with a total capacity of 44.7 MW, solar power plants with a total capacity of 1.5 MW and captive power plants with generation capacity of 105 MW. As of March 31, 2021, these generate 50.43% (on a proforma basis) of their total power requirements. Company's Cement Plants are strategically located with road and rail connectivity to company's key markets of East India and North India. The plants are also located in proximity to its limestone reserves and other raw materials, such as slag and fly ash. They transport clinker from its integrated Cement Plants to the grinding units via rail and road. Gypsum, coal, slag and pet coke, which are essential raw materials for the manufacture of cement and generation of power for its captive power plants, are sourced via rail and road. They have captive railway sidings at six of its plants, these give them a significant competitive advantage in transporting raw materials and finished products from these plants. As per financial performance, Nuvoco has posted total income/net profits (loss) of Rs. 6,911.71 cr. / Rs. 88.57 cr. (FY18), Rs. 7,105.88 cr. / Rs. (28.07) cr. (FY19), Rs. 6,829.94 Cr. / Rs. 246.21 Cr. (FY20) and Rs. 7,522.69 Cr. / Rs. (22.99) Cr. (FY21). So company has posted zig-zag results and posted losses in some years. Company has posted an average EPS of Rs. 2.83 and average RoNW of 1.31% for last three fiscals. Issue is priced at a P/BV of 2.45 as per NAV of Rs 232.43/- on 31.03.21. Company has posted loss, so there is no point in calculating P/E ration, but as per FY20 earnings on fully diluted equity post issue, IPO is priced at P/E of 82. As per RHP, comparison between listed peers are shown in above table. On BRLM's front, five BRLMs are associated with this IPO, and have handled around 65 IPO in last three fiscals. From last 10 IPOs, two opened below issue price and remaining opened above issue on the day of listing. As of now, all are trading above issue price. ( As on 04.08.21) As per financials, company has shown zig-zag results, RoNW and P/E are negative as company had made loss in FY21. As the pandemic situation is normalising, its expected next 3-5 years will see huge infrastructure development in BHARAT and so demand for cement will be good. Performance of BRLM is good. So, we are giving NEUTRAL rating to this IPO and very limited listing gains are expected.

• 1 Niyogi Enterprise Private Limited
• 2 Dr. Karsanbhai K. Patel