The shares of one of the largest cement and concrete manufacturers gained up to 1 percent after a well-known brokerage recommended a ‘buy’ rating.
With a market capitalization of Rs 12,843.34 crore, the shares of Nuvoco Vistas Corporation Ltd closed at Rs 360 per share, increased around 1.19 percent as compared to the previous closing price of Rs 356.10 apiece.
Looking into Nuvoco Vistas Corporation’s performance, revenue increased by 7 percent from Rs 2,605 crore in Q3 FY23 to Rs 2,421 crore in Q3 FY24. During the same period, net profit increased by 141 percent, from a loss of Rs 75 crore to a profit of Rs 31 crore.
HDFC Securities, one of the well-known brokerages in India, gave a ‘Buy’ call on the cement stock with a target price of Rs 515, indicating a potential upside of 42 percent from Thursday’s closing price of Rs 360.00 per share.
Here’s the reason for the probable upward target:
● Nuvoco focused on improving realization in the face of heightened competition, resulting in a 4% QoQ and a 3% YoY boost in Net Sales Revenue (NSR). Healthy pricing across markets contributed to this improvement.
● Operating expenses for cement decreased by 2% QoQ, attributed to reductions in slag prices, fuel consumption costs, and other expenses. The company’s slag procurement cost was reported to be approximately 33% lower than the market rate.
● The company recently commenced commercial production at the 1.2 million metric tons Haryana SGU, expanding its cement capacity to 25 million metric tons.
● Capex of Rs 4.57 billion was spent on various projects, and an additional INR 1.5 billion is planned for Q4. Net debt was reduced by 4% QoQ to Rs 45.3 billion, improving the net debt to EBITDA ratio to 3x, down from 3.45x QoQ and 4.1x YoY.
● Nuvoco aims to focus on volume growth once demand in the east improves, and the outlook anticipates a 3.5% volume Compound Annual Growth Rate (CAGR) during FY23-26E. Effective cost controls and a high share of low-cost linkage coal are expected to drive EBITDA growth at a 21% CAGR.
The corporation has a Capex plan of about Rs 98,000 crore, including Rs 25,000 crore from AAI for airport construction, upgrade, and modernization in 2019-24. The firm’s additional capacity will allow the company to meet the demand in the Northern area.
Written by:- Abhishek Singh
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