Broker’s call: Nuvoco Vistas (Reduce)

Posted on by

Target: ₹349

CMP: ₹331.70

Nuvoco Vistas Ltd Q2-FY25 volumes came at 4.2 mt, down 6.7 per cent y-o-y and 12.5 per cent q-o-q, impacted due to extended monsoon season and less than expected govt spends. Revenue for quarter came at ₹2,268.60 crore, down 11.8 per cent y-o-y and 14 per cent q-o-q. EBITDA/t for the quarter came at ₹521/tonne, down 29 per cent y-o-y and 27.2 per cent q-o-q.

Company had reported loss of ₹85.20 crore vs profit of ₹1.3 crore in Q2-FY24. Share of premiumization reaching at 43 per cent of trade volumes vs 40 per cent in previous quarter.

The recovery in demand is anticipated to rely on increased spending by govt on infrastructure and housing activities.

Key drivers for this growth include a 57 per cent increase in the PMAY budget for FY25E, the acceleration of the Purvodaya Mission for comprehensive development in the eastern region, and the implementation of ₹26,000 crore in highway development projects in Bihar. In addition to these factors, the company is prioritising cost reduction initiatives aimed at enhancing EBITDA/t.

Management is forecasting a volume growth of 4 per cent for FY25. As per our FY27E estimates we expect Volume/Revenue/ EBITDA to grow at a CAGR of 4.5/3.7/4 per cent respectively over FY24-FY27.