Hold Nuvoco Vistas Corporation: target of Rs 348: ICICI Securities

Moneycontrol • 6 days ago

Original source

Key Investment Pillars

  • Volume growth: Nuvoco's Q2FY27 volume jumped 9% YoY, driven by a robust North region demand, and the company expects industry demand growth of ~8% in H2FY27.
  • Pricing power: The company has taken price hikes to offset the impact of rising fuel costs, with realisations expected to improve QoQ.
  • Cost management: Nuvoco has controlled its fixed costs, with 'other expenses' easing ~5% QoQ, and expects cost inflation of ~INR 100-120/t QoQ in Q3FY27.
  • Debt and capex: The company's net debt has increased, and it has revised its FY27 capex guidance to ~INR 12bn, with a focus on the Vadraj project.

Thesis Validation Checklist

  • Demand growth: Monitor industry demand growth in H2FY27, with Nuvoco expecting ~8% growth.
  • Pricing trends: Track cement price hikes and their sustainability, as well as the company's ability to pass on cost increases.
  • Cost control: Watch for Nuvoco's ability to manage its costs, particularly fuel costs, which are expected to rise.
  • Debt reduction: Monitor the company's progress in reducing its net debt, which is expected to return to the Mar'26 level by the end of FY27.