Shares of Nuvoco Vistas Corporation Ltd, one of the leading cement and concrete manufacturers, saw a 1 percent increase following a favorable recommendation from a renowned brokerage. The company, with a market capitalization of Rs 12,843.34 crore, closed at Rs 360 per share, representing a 1.19 percent rise compared to the previous closing price of Rs 356.10 per share.
Nuvoco Vistas Corporation’s financial performance indicates positive growth. In Q3 FY24, the company witnessed a 7 percent increase in revenue, from Rs 2,605 crore to Rs 2,421 crore. Additionally, during the same period, net profit surged by a significant 141 percent, shifting from a loss of Rs 75 crore to a profit of Rs 31 crore.
HDFC Securities, a well-known brokerage in India, has recommended a ‘Buy’ call on Nuvoco Vistas Corporation’s cement stock, setting a target price of Rs 515. This target suggests a potential upside of 42 percent from the closing price on Thursday.
The positive recommendation for Nuvoco Vistas Corporation’s stock is supported by several factors. Firstly, the company has focused on improving realization despite intense competition, leading to a 4 percent quarter-on-quarter (QoQ) boost and a 3 percent year-on-year (YoY) increase in Net Sales Revenue (NSR). This improvement can be attributed to healthy pricing across markets.
Furthermore, operational expenses for cement have decreased by 2 percent QoQ, primarily due to reductions in slag prices, fuel consumption costs, and other expenses. The company has also managed to lower its slag procurement cost, which stands at approximately 33 percent lower than the market rate.
Nuvoco Vistas Corporation has recently commenced commercial production at its Haryana SGU, with a capacity of 1.2 million metric tons. This expansion has increased the company’s overall cement capacity to 25 million metric tons, providing it with the ability to meet the growing demand in the Northern region.
Moreover, the company has invested Rs 4.57 billion in various projects and plans to allocate an additional INR 1.5 billion for Q4. This investment has allowed Nuvoco Vistas Corporation to reduce its net debt by 4 percent QoQ to Rs 45.3 billion, resulting in an improved net debt to EBITDA ratio. The company aims to focus on volume growth, especially once demand in the east improves, with an anticipated 3.5 percent volume Compound Annual Growth Rate (CAGR) during FY23-26E.
With a Capex plan of about Rs 98,000 crore, including significant funding from AAI, Nuvoco Vistas Corporation is well-positioned to meet the demand for cement and concrete products, particularly in the Northern region. Investors are advised to take caution and consult their investment advisors before making any investment decisions.
Nuvoco Vistas Corporation Ltd: Nuvoco Vistas Corporation Ltd is a leading cement and concrete manufacturer in India. It has a market capitalization of Rs 12,843.34 crore and operates with a cement capacity of 25 million metric tons.
Q3 FY24: Refers to the third quarter of the financial year 2023-2024.
Revenue: The income generated by a company from its normal business activities.
Net Profit: The profit left after deducting all expenses, including taxes and interest, from the revenue.
HDFC Securities: A renowned brokerage firm in India.
‘Buy’ Call: A recommendation to buy a particular stock.
Target Price: The price at which a brokerage firm expects a stock to reach.
Realization: The actual price at which a company sells its products.
Net Sales Revenue (NSR): The total revenue generated by a company after deducting discounts and returns.
Quarter-on-Quarter (QoQ): A comparison of a company’s financial performance between two consecutive quarters.
Year-on-Year (YoY): A comparison of a company’s financial performance between the same quarters of two consecutive years.
Operational Expenses: The costs incurred by a company in its day-to-day operations.
Slag: A byproduct of steel production that can be used as a cement additive.
Net Debt: The total debt of a company minus its cash and cash equivalents.
EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of a company’s operating performance.
Capex Plan: Capital expenditure plan, which includes investments in projects and assets.
AAI: Airports Authority of India, an organization that manages and operates airports in India.
Volume Compound Annual Growth Rate (CAGR): The average growth rate of a company’s volume over a specified period.
Related Links:
– Nuvoco Vistas Corporation Ltd Official Website
– HDFC Securities