Nuvoco Vistas IPO:

The initial public offering (IPO) of cement manufacturer Nuvoco Vistas Corporation, will open for subscription on Monday, August 9, 2021, at a price band of Rs 560-570 per share. The offer will be available till Wednesday, August 11, 2021.

The cement manufacturer, which is a part of the Nirma Group, has a consolidated capacity of 22.32 million metric tonnes per annum (MMTPA). It has 11 cement plants comprising five integrated units, five grinding units and one blending unit. It operates cement manufacturing units in Chhattisgarh, Jharkhand, West Bengal, Rajasthan and Haryana.

Through the offer, Nuvoco Vistas aims to raise Rs 5,000 crore with the help of a fresh issue of shares worth Rs 1,500 crore and an offer for sale of Rs 3,500 crore by promoter Niyogi Enterprise.

The proceeds from the fresh issue will be used for the repayment of certain loans availed by the company and for general corporate purposes.

Half of the issue size has been reserved for qualified institutional buyers (QIBs), 35 per cent for retail investors and the remaining 15 per cent for non institutional investors.

Investors who wish to subscribe to the Nuvoco Vistas IPO can bid in a lot of 26 equity shares and multiples thereafter. At the upper price band, they will be shelling out Rs 14,820 to get a single lot of Nuvoco Vistas Corporation. The shares will be listed on both BSE as well as the National Stock Exchange (NSE).

The applicants also must note that the cut-off time for UPI mandate confirmation is Thursday, August 12, 2021, upto 12:00 pm. If they fail to do so then their application may not be considered.

ICICI Securities, Axis Capital, HSBC Securities and Capital Markets (India), JP Morgan India and SBI Capital Markets are the book running lead managers to the IPO while Link Intime India is the registrar of the issue.

Before heading into the IPO, Nuvoco Vistas Corporation raised Rs 1,500 crore (Rs 14,99,99,99,160) from 66 anchor investors in lieu of 2,63,15,788 equity shares at Rs 570 each, data from the stock exchanges showed.

The anchor investors include the likes of HDFC Life Insurance Company, SBI Life Insurance Company, SBI Mutual Fund (MF), Axis MF, Mirae MF, Franklin Templeton MF, Premji Invest, SBI Pension Fund, APG AM, CI Funds, TT International, Carmignac and Wells Capital among others.

The research team at Anand Rathi Share and Stock Brokers and IIFL Securities in their respective IPO notes have recommended a “Subscribe” with a long term to the offer.

IIFL Research in its report said, “At an EV/EBITDA multiple of 18.4x of FY21, Nuvoco Vistas Corporation Limited would be valued only second to Shree Cement which has a multiple of 23.5x. Ambuja Cements, ACC and UltraTech Cement have an EV/EBITDA multiple of 10.9x, 12.3x and 17.3x of FY21, respectively. However, considering the future growth potential of the infrastructure industry, EBITDA growth of 24 per cent CAGR during FY19 to FY21, market leadership in East India, strong distribution network, wide product portfolio, high-capacity utilization of ~90 per cent and plans of expansion, we recommend ‘Subscribe’ to the issue with a long-term perspective.”

Anand Rathi Research in its report noted, “At the upper end of the IPO price band, NVCL (Nuvoco Vistas Corporation Ltd) is offered at an Ev/Tonne of 15,300 which we believe is reasonably priced as compared to its listed peers. On the financial front, NVCL is backed by sound Balance sheet (i.e. Net debt/Equity at 0.6x which is also below industry average of 0.8x) and steady cash flows which makes NVCL to embark on next round of growth. Further with the planned expansion, lowering debt and other cost control measures, we are also confident that company will maintain the growth levels which is mirroring in the pricing of the IPO.”

“Considering these and the growth prospects in light of affordable housing push to meet PMAY (Pradhan Mantri Awas Yojna) for all by 2022 target of the Government, investors may consider an investment with a long term perspective. Hence, we recommend a “Subscribe (Long Term)” rating to this IPO,” the report said

The share allotment is likely to take place on August 17, 2021, and the shares are expected to be listed on August 23, 2021, according to the timeline given in the red herring prospectus (RHP).