Nuvoco Vistas makes a weak debut in stock markets, lists at over 17% below issue price

Nuvoco Vistas makes a weak debut in stock markets, lists at over 17% below issue price

Nuvoco Vistas share price: The shares of cement manufacturer Nuvoco Vistas Corporation made a weak debut on the stock exchanges today listing at over 17 per cent lower than their issue price.

The scrip got listed at Rs 471.00 apiece on the BSE, thereby registering a fall of 17.37 per cent from its offer price of Rs 570.00, while on the National Stock Exchange (NSE), it opened at Rs 485.00, down 14.91 per cent from the issue price.

However, the stock gained from its opening lows and touched an intraday high of Rs 546.80 on NSE and Rs 547.15 on the BSE so far during the first 15 minutes of trade.

At 10:15 am, the scrip was trading at Rs 541.15 on the BSE, down 5.06 per cent from the issue price while on NSE it was at Rs 543.45.

Over 80.78 lakh shares of Nuvoco Vistas Corporation were traded on the NSE during the first 15 minutes of trade, while over 3.98 lakh shares exchanged hands on the BSE, data from the respective stock exchanges showed.

The Rs 5,000 crore IPO of the cement manufacturer, which is a part of the Nirma Group, was subscribed 1.71 times during its offer period from August 9-11.

The company 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.

Nuvoco Vistas shares debut at a 17% discount to the issue price of Rs 570

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India’s fifth largest cement maker Nuvoco Vistas Corporation shares made a weak debut on August 23 as it started off first day trade at a 17.37 percent discount to issue price of Rs 570. The stock opened at Rs 471 on the BSE and at Rs 485 on the National Stock Exchange.

The grey market had already indicated a downward trend due to weak market conditions in the previous week. The impact was already seen in CarTrade Tech listing on Friday that was down 7.3 percent at close in debut trade despite strong subscription.

The Rs 5,000-crore initial public offering of the cement maker had seen tepid response from investors during August 9-11 as it was subscribed only 1.71 times largely driven by qualified institutional buyers (QIBs). The issue had received bids for 10.7 crore equity shares against the IPO size of 6.25 crore equity shares.

The portion set aside for QIBs was subscribed 4.23 times, but non-institutional investors and retail investors' portion remained undersubscribed, subscribing 66 percent and 73 percent respectively.

The offer had comprised a fresh issue of Rs 1,500 crore which will be used for repaying of debts, and an offer for sale of Rs 3,500 crore by promoter Niyogi Enterprise.

All the brokerages had recommended to subscribe the issue for long term, citing optimism over the sector, government’s push for infrastructure & affordable housing, strong balance sheet, leadership in the Eastern Region, and below industry average debt to equity ratio.

Nuvoco is the 5th largest cement company in India and the largest cement company in East India in terms of capacity. As of December 2020, cement plants have an installed capacity of 22.32 million tonnes per annum.

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“Considering the growth prospects in light of affordable housing push to meet PMAY (Pradhan Mantri Awas Yojna) for all by 2022, planned expansion, integration of NU Vista, lowering debt and other cost control measures, we recommend to “subscribe” the issue for long term perspective,” said Ashika Stock Broking.

KRChoksey Research also believed Nuvoco IPO gives investors an opportunity to invest in leading cement manufacturer which has a highest market share in east India.

“We assume Nuvoco is well positioned to tap the increasing demand in north and west part of India followed by its focus in central region. We are also optimistic about the sector and expect opportunities to scale up with governments continuous push for infrastructure sector,” said the brokerage which recommended to invest for long term investment.

The brokerage further said also considering company’s range of distribution channels and direct sales to improve their reach to customers, Nuvoco stands well to get the favourable and supportive industry growth to drive sustainable business as well as profitable growth in the medium to long-term with its well-diversified product portfolio and focus on premiumisation.

“Net debt/ EBITDA stands high at 4.5x which will come down with their objective of repayment through IPO proceeds. On EV/EBITDA front it is still trading at a discount to most of its large cap peers at 15x-19x FY22E EV/EBITDA and on operational front it stands better at 19 percent margins against industry margins of 14-16 percent,” KRChoksey added.

The Nirma Group forayed into the cement business in 2014 through a greenfield cement plant in Nimbol. It has successfully been able to grow the cement business through acquisitions such as the acquisition of the Indian cement business of LafargeHolcim in 2016 and in 2020 by acquiring NU Vista.

“The smart acquisition of NU Vista from Emami group would remain our focus to rerate our view on the company,” said KRChoksey.

“NU Vista deal has brought in lot of synergies to the company and should augur well in the future. The inclusion of its brand ‘Double Bull Cement’ and its variants in their brand portfolio has supported Nuvoco’s growth. On operational front NU Vista has also been EBITDA positive,” the brokerage explained.

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Nuvoco Vistas shares list at sharp discount to issue price

Shares of Nuvoco Vistas Corporation made a lackluster debut at the Indian stock market on Monday. The stock listed at ₹417 per share on the National Stock Exchange (NSE), 17% discount to issue price of ₹570 apiece. Nuvoco Vistas shares recovered from lows, however, closed in the red at ₹531, down over 6%.

The cement manufacturer, part of the Nirma Group, launched its three-day initial public offering (IPO) on August 9 which concluded on August 11 with the price at ₹560-570 a share. The initial share sale of the company was subscribed 1.71 times on the the closing day of bidding.

The IPO received bids for 10,70,27,492 shares against 6,25,00,001 shares on offer. The portion for Qualified Institutional Buyers(QIBs) was subscribed 4.23 times, non-institutional investors 66 per cent and Retail Individual Investors (RIIs) 73 per cent. The initial public offer aggregating up to ₹5,000 crore had a fresh issue of up to ₹1,500 crore and an offer for sale of up to ₹3,500 crore.

Nuvoco Vistas is a cement manufacturer with 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.

‘‘NVCL’s plants are located at various strategic locations in east and north India. They have three integrated units and five grinding units in East India, and two integrated units and one blending unit in North India. These locations allow them to effectively sell their products in East and North India as well as access to select key markets in Central India. They are also in the process of enhancing their cement capacity in their existing grinding units in Jojobera Cement Plant and Bhabua Cement Plant in East India. The connectivity to raw materials and their customers allows them to manufacture and sell their cement products in a cost-efficient manner,’’ ICICI Direct had said in the IPO note.

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