Prabhudas Lilladher Maintains BUY Rating on Nuvoco Vistas with ₹443 Target Price
Prabhudas Lilladher maintains BUY rating on Nuvoco Vistas Corporation with revised target price of ₹443, up from ₹435. The cement company delivered inline Q3FY26 performance with 7% YoY volume growth and 39% YoY increase in EBITDA per tonne to ₹763. Despite declining cement realizations and elevated raw material costs, the brokerage expects 19% EBITDA CAGR over FY25-28E, supported by the upcoming Vadraj acquisition.
*this image is generated using AI for illustrative purposes only.
Nuvoco Vistas Corporation has received a maintained BUY rating from Prabhudas Lilladher, with the brokerage revising its target price upward to ₹443.00 from the earlier ₹435.00. The recommendation comes following the company's inline operating performance in Q3FY26, which demonstrated resilience despite challenging market conditions.
Q3FY26 Operational Performance
The cement manufacturer reported decent volume growth during the quarter, with key performance metrics reflecting mixed results:
| Performance Metric | Q3FY26 Result | Change |
|---|---|---|
| Volume Growth | - | +7% YoY |
| Pure Cement Realizations | - | -5.3% QoQ |
| EBITDA per Tonne | ₹763.00 | +39% YoY |
| Power and Fuel Costs | - | -9% YoY |
The decline in pure cement realizations was primarily attributed to weak prices in the eastern region. However, this was offset by significant improvement in EBITDA per tonne, which reached ₹763.00 compared to Prabhudas Lilladher's estimate of ₹775.00.
Cost Structure and Margin Dynamics
Raw material costs remained elevated despite the company's access to better-priced slag under long-term contracts. The power and fuel cost reduction of 9% YoY was aided by a higher share of domestic coal in the energy mix. Management expects overall fuel costs to remain largely stable, supported by increased domestic coal usage.
The recent uptick in pet coke prices poses a risk to margins in Q4FY26. However, cement price hikes implemented in January are holding amid improving demand conditions, providing some support to realizations.
Expansion Plans and Capacity Growth
The Vadraj acquisition remains on track with commissioning expected by Q1FY28. This strategic expansion will take Nuvoco Vistas Corporation's total cement capacity to approximately 35 million tonnes per annum, significantly enhancing its market presence.
Financial Projections and Valuation
Prabhudas Lilladher has raised its EBITDA estimates by 2% based on slightly higher volumes. The brokerage expects the company to deliver EBITDA CAGR of 19% over FY25-28E period.
| Valuation Metrics | FY27E | FY28E |
|---|---|---|
| EV/EBITDA Multiple | 8.2x | 6.8x |
| Target Valuation | 9x EV of Sep'27E EBITDA | - |
The stock is currently trading at EV of 8.2x FY27E EBITDA and 6.8x FY28E EBITDA. The revised target price of ₹443.00 is based on 9x EV of September 2027E EBITDA, reflecting the brokerage's confidence in the company's growth trajectory and operational improvements.
Historical Stock Returns for Nuvoco Vistas Corporation
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| +0.09% | +7.68% | +7.99% | +10.04% | -17.30% | 0.0% |
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