Nuvoco Vistas IPO – Issue Details and Review [Analysis]
Nuvoco Vistas Corporation IPO (Nuvoco IPO) Details
Nuvoco Vistas is coming up with IPO that would open for subscription on 9th August 2021. Nuvoco Vistas Ltd one of the largest cement companies and concrete manufacturers in India. Nuvoco Vistas is part of Nirma Group. Company revenues are fluctuating in the last couple of years. It incurred loss for 2 out of last 3 financial years. Should you invest in Nuvoco Vistas IPO? What are the risk factors in this IPO? Are there any reasons it shows high profits in FY2020, but loss in FY2019 and FY2021?
About Nuvoco Vistas Corporation Limited
Company is part of Nirma Group. It is the 5th largest cement company in India and the largest cement company in East India in terms of capacity. As of December 31, 2020, its cement production capacity constituted approximately 4.2% of total cement capacity in India, 17% of total cement capacity in East India and 5% of total cement capacity in North India. They are one of the leading ready-mix concrete manufacturers in India.
As of March 31, 2021, they have 11 Cement Plants (8 in East India and 3 in North India). Its cement plants are in the states of West Bengal, Bihar, Odisha, Chhattisgarh and Jharkhand in East India and Rajasthan and Haryana in North India, while its RMX Plants are located across India. As of March 31, 2021, its cement plants have an installed capacity of 22.32 MMTPA. Three of its plants in East India are integrated units and 5 plants are grinding units. Two of its plants in North India are integrated units and the third is a blending unit.
They have waste heat recovery systems at all its integrated plants with a total capacity of 44.7 MW, solar power plants with a total capacity of 1.5 MW and captive power plants with generation capacity of 105 MW. As of March 31, 2021, these generate 50.43% of its total power requirements.
Nuvoco Vistas IPO details
|IPO Opening Date||09-Aug-21|
|IPO Closing Date||11-Aug-21|
|Issue Type||Book Built Issue IPO|
|Face Value||Rs 10 per equity share|
|IPO Price band||Rs 560 to Rs 570 per equity share|
|Lot Size||26 Shares|
|Min Order Quantity||26 Shares|
|Listing at||BSE and NSE|
|Issue Size||Total Size: Rs 5,000 Crores
i) OFS: Rs 3,500 Crores
ii) Fresh Issue: Rs 1,500 Crores
What are Nuvoco Vistas Corporation Limited competitive strengths?
1) Company is the largest cement manufacturer in East India in terms of total capacity.
2) It is strategically located cement plants with proximity to key markets.
3) Company has strong brand recognition and a large distribution network.
4) Experienced promoters and managers team.
What are the Objects of the Offer?
It has two objects of the offer for the IPO size of Rs 5,000 Crores
1) Offer for Sale (OFS) Rs 3,500 Crores: Under OFS selling shareholders would sell the shares and company would not get any proceeds from the issue.
2) Fresh issue for Rs 1,500 Crores: Fresh issue would be utilized for the following:
i) To repay/prepay/redeem borrowings availed by the firm fully or partially.
ii) General corporate purposes.
Who is the promoter of Nuvoco Vistas Corporation Limited?
Niyogi Enterprises Pvt Ltd and Dr. Karsanbhai K Patel (Nirmal Group) are the company promoters.
How is the company financial track record?
Here are the total assets, revenues and profits of the company in the last 3 years.
|Financial Year ending / Period ending (Amt in Mns)|
|Profit After Tax||-264.8||2,492.5||-259.1|
Why to invest in Nuvoco Vistas IPO?
Here are the positive factors in this company.
1) Nuvoco Vistas Ltd is one of the largest cement companies and concrete manufacturers in India.
2) Company has large distribution network with strong / experienced promoter (Nirma group) and management team.
Risk Factors in Nuvoco Vistas IPO
1) Company revenues are fluctuating. Its revenues declined in FY20 compared to FY19. Its revenues for FY19, FY20 and FY21 are Rs 7,105.8 Crores, Rs 6,829.9 Crores and 7,522.6 Crores respectively. Consistent growing companies can reward investors in medium to long term.
2) Company has incurred losses for 2 years out of last 3 financial years. It generated loss of Rs 26.4 Crores and 25.9 Crores in FY19 and FY21. However, it generated profit of Rs 249.2 Crores in FY20.
It generated profits for FY20 where there is one timers for benefit of Rs 61 Crores for valuation of inventories and Rs 100 Crores due to lower “Other expenses” etc. Such benefits / lower expenses might not get every year.
3) Company business has an impact due to covid-19 pandemic. It may continue to have impact in future too.
4) Its business is dependent on its ability to mine / procure sufficient limestone for its operations. Its inability to do so can have adverse impact on the business.
5) Recent enacted Mines and Minerals (Development and regulation) Amendment Act, 2021 may result in lapsing of letters of intent for the grant of mining leases u/s 10A of the MMDR act.
6) The limestone reserve data and reserve life indicated in RHP is an estimate and actuals may differ. If such actuals data is lower than estimate, it can affect financial condition of the company.
7) Company business is dependent on the continued availability of coal, water, labour and raw materials used in the production of cement. The costs and supply might have significant variation and it can impact company business.
8) Under-utilization of its manufacturing facilities and an inability to effectively utilize its expanded manufacturing capabilities could have effect on its business and prospects of the company.
9) Investors should read complete risk factors indicated in the RHP of the IPO document before investing in this IPO.
Nuvoco Vistas IPO dates for subscription, Allotment and Listing
|Finalization of Allotment||17-Aug-21|
|Initiation of Refunds||18-Aug-21|
|Credit to Demat Account||20-Aug-21|
|IPO Shares Listing Date||23-Aug-21|
Is Nuvoco Vistas IPO Price is underpriced or overpriced?
Its IPO price band is Rs 560 to Rs 570.
1) On the upper price band of Rs 570 and last 3 years average EPS of Rs 2.83, the P/E ratio works out 201x.
2) We cannot check P/E for FY21 as company has incurred losses and EPS is negative for this financial year.
3) There are listed peers in this segment like Shree Cement trading at P/E 44x (Highest) and ACC Cement trading at P/E 22x (Lowest). Hence if we take last 3 years average EPS and consider the P/E, the issue price of Nuvoco IPO is highly priced.
What is Nuvoco Vistas IPO GMP?
Nuvoco Vistas IPO GMP is not yet known as we could see any trades happening. GMP is nothing but the premium at which the shares are trading in offline market. This is just an indication about IPO price as it is unorganized market.
Nuvoco Vistas IPO – Review and Recommendation
You might be wondering “Should I buy Nuvoco Vistas IPO?”.
Nuvoco Vistas Ltd is part of Nirma group and is one of the largest cement companies and concrete manufacturers in India.
Company revenues are fluctuating in the last 3 years.
Company has incurred losses for 2 years out of last 3 financial years.
The IPO share price is aggressively priced.
Considering all positive and negative factors, investors can give miss to this IPO.
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