Buy the dip and stay invested in Nuvoco Vistas

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Shares of Nirma Group’s cement arm Nuvoco Vistas did a disappointing stock market debut on Monday. The shares of the company opened for trading at Rs 485 on the National Stock Exchange (NSE) and at Rs 471 on the BSE, compared to the issue price of Rs 570, marking a discount of 17.37% or Rs 99. However, the stock recovered from its low and was trading at Rs 530.95 apiece at 1:20 pm yet trading below its issue price. On an intraday basis, it made a low of Rs 471 and a high of Rs 550 on the BSE. Investors are in a fix as they were expecting decent listing going by the grey market trends. Here is what analysts are advising.

Listing strategy

Saurabh Joshi of Marwadi Shares and Finance suggested investors should buy the dips and stay invested for long term. “The company listed at Rs.485/- with a market cap of Rs.17,546 crore implying a valuation of 15.62 times EV/EBITDA (enterprise value by earnings before interest tax depreciation and amortization) multiple whereas its peers namely Ultratech Cement and Shree Cement are trading at 20.58 times and 23.77 times EV/EBITDA multiple. The company is the largest cement manufacturing company in East India with strong R&D capabilities along with market-leading brands and is available at reasonable valuation compared to its peers,” Joshi added.

Even Santosh Meena, Head of Research at Swastika Investmart is of a similar opinion and advised investors to stay invested. “We have a bullish view on the infrastructure sector for the next 3-5 years, therefore, we expect the cement sector also to do well. If we talk about Nuvoco vistas then investors can hold this stock for the long term on the back of a bullish outlook on the sector and strong market share,” said Meena.

About Nuvoco Vistas

Nuvoco Vista Corporation, part of Nirma Group Company is among one of the largest cement companies and concrete manufacturers in India. It offers a diversified range of products such as cement, Ready-mix Concrete (RMX), and modern building materials i.e. adhesives, wall putty, dry plaster, cover blocks, and more.

The company’s plants are located in the states of West Bengal, Bihar, Odisha, Chhattisgarh, and Jharkhand in East India and Rajasthan and Haryana in North India with an aggregated installed capacity of 22.32 MMTPA (million metric tonnes per annum).

On the financial front, the company reported total revenue of Rs 7,522.69 crore compared to Rs 7,105.89 crore in FY19. Companies bottom line is in the red as it reported a net loss of Rs 25.92 crore versus a loss of Rs 26.49 crore during the same period. However, the company had posted a profit of Rs 249.26 crore in FY20.

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