PremiumMUMBAI: Shares of Nirma Group's cement company Nuvoco Vistas Corporation Ltd made a weak listing on the stock exchanges on Monday, listing at over 17% discount to their issue price. Its initial public offering was subscribed over 1.71 times last week.
The stock opened at ₹471 and touched a high of ₹512 and a low of ₹471. At 10.05 am, the scrip was at ₹508 on BSE, down 11% from its issue price of ₹570 a share.
Analysts said that the company is bringing the issue at price band of ₹560-570 per share at post issue EV/EBITDA multiple of 16 on FY21 EBITDA basis. Ebitda is short for earnings before interest, taxes, depreciation, and amortization.
“We like NVCL due to its leadership position in fast-growing East market, wide premium product portfolio and ability to successfully integrate large acquisitions. The issue is valued at $146 FY21 EV/ton and 16.6x EV/EBITDA on post issue basis, which is at discount to industry average given slightly weaker financials. As NVCL has a short history of existence, we believe it has potential to improve its financials in the long run and come at par with its peers as operating leverage kicks in. It is expected to witness strong growth going ahead led by its expansion plans, integration of NU Vista and debt reduction" said Motilal Oswal in a note to its investors.
The IPO will comprise a fresh issue of ₹1,500 crore and an offer for sale of ₹3,500 crore by its promoter entity Niyogi Enterprise Pvt. Ltd. Niyogi Enterprises holds 86.56% stake in the company.
The proceeds from the fresh issue of shares will be used for repayment in full or part of certain borrowings availed by the company. As of March 2021, the total borrowings of the company (long-term and short-term) stood at ₹7,642.18 crore.
Nuvoco Vistas Corp., the fifth-largest cement company in India, began its journey after acquiring the Indian cement business of Lafarge Holcim in 2016 for $1.4 billion. In 2020, it inked a $770 million deal to buy the cement assets of Emami Group.
The company's cement plants are located in West Bengal, Bihar, Odisha, Chhattisgarh and Jharkhand in east India and Rajasthan and Haryana in north India, while ready mix concrete (RMX) Plants are located across India. Currently, its cement plants have an installed capacity of 22.32 MMTPA, and it operates 49 RMX Plants.
“Nuvoco has aggressively added capacities in the East and provides good exposure to the cement sector. Improved profitability post the integration of the Emami unit and deleveraging over the next few years would be the key triggers for the stock", said Milan Desai, lead equity analyst, Angel Broking.
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