Nuvoco Vistas is the largest cement manufacturer in East IndiaNuvoco Vistas Corporation's Rs 5,000 croreinitial public offering (IPO) was subscribed 1.71 times on the third and final day of its issue today,according to subscription data on the stock exchanges.
The public offer of thecement arm of the Nirma Group opened for bidding on August 9, Monday and closed on August 11, remaining open for investors for a period of three days.The IPO consists of a fresh issue of1,500 crore and an offer for sale of Rs3,500 crore.On Wednesday,qualified institutional buyers or QIBshowed greaterinterest as the portion reserved for them was subscribed 4.23 times -the highest among the three groups of investors.The portion set aside for theretail individual investors was subscribed 0.73 times,whilenon-institutional investors or NII showed tepid interest as the portion reserved for themwas subscribed 0.66times.The companysoldshares in the price band of Rs 560 to Rs 570 per equity share, through its public offer.The Nuvoco IPO market lot size is 26 shares and retail individual investors could apply for a maximum of 13 lots of 338 shares.Nuvoco Vistas is the largest cement manufacturer in East India and the fifthlargest cement player in the country, by capacity.It providesa varietyof products such as cement,modern building materials i.e.
adhesives, ready-mix concrete (RMX), wall putty, dry plaster, among others The company seeks to utilise the IPO fundsto repay debt worth Rs 1,350 crore and for general corporate purposes."Nuvoco Vistas has reported a tepid rise in topline over the last three years, and negative bottomline for FY19 and FY21.
The company has seen a healthy 25 per cent rise in its EBITDA over this period, on the back of improvement in cost efficiency.Nuvoco has lower EBITDA margin and return ratios as compared to its larger listed peers (20% for Nuvoco in FY21).
The peer average is between 24-25 per cent.
Further, these larger powers such as Ultratech Cement, Shree Cement, Ambuja Cement and ACC are also profitable at the net levelAs the earnings are negative, comparison on the basis of P/E ratio is not possible.At the higher price band of Rs 570, Nuvoco Vistas Corp reported 18.54 times EV/EBITDA in FY21 on a post-issue basis.
This is lower as compared toShree Cement (25 times) and Ultratech Cement (19.64 times).Given their better financial profiles, the peers are expected to trade at higher valuations.Given the company's strong brand value, robust growth in capacity addition, good visibility for cement companies due to focus on infra, reduction in debt, and improvement in margins and profitability going forward, we remain positive on the prospects of this issue on a long-term basis,"SEBI-registered investment advisor INDmoney said in a report.