Nuvoco Vistas Corporation initial public offering (IPO) Opens Today. Should One Invest?

Nuvoco Vistas Corporation initial public offering (IPO) opens for subscription today i.e. August 9. The Rs 5,000 crore IPO of the cement arm of the Nirma Group will remain open for three days, until August 11. The IPO will consist of a fresh issue of Rs 1,500 crore and offer for sale of Rs 3,500 crore. Nuvoco Vistas’ shares are likely to be listed on the bourses on August 23.

Burnpur Cement was the last cement listing on the Indian bourses way back in November 2007.

The proceeds from the share sale will be used to repay debt worth Rs 1,350 crore and for general corporate purposes.

Nuvoco Vistas is the 5th largest cement player, by capacity. It has three business verticals, viz. cement, ready-mix concrete and modern building materials. It has cement plants in Chhattisgarh, Rajasthan, Haryana and West Bengal, and has also diversified into building materials including ready mix concrete and modern building materials.

Ultratech Cement and Shree Cement are the listed peers of Nuvoco Vistas.

ICICI Securities, Axis Capital, JP Morgan, HSBC Securities and SBI Capital are the advisors to the IPO of Nuvoco Vistas Corporation.

Should one invest in the IPO of Nuvoco Vistas Corporation?

“At the upper end of the IPO price band, Nuvoco Vistas Corporation Limited is offered at an Ev/Tonne of 15300, which we believe is reasonably priced 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,” Anand Rathi said in a note to its investors.

“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,” Anand Rathi added.