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:

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.

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.

Nuvoco Vistas Corporation delivered exceptional third-quarter performance for FY26, achieving a remarkable turnaround from loss to profitability. The cement manufacturer reported a consolidated net profit of ₹49.10 crores in Q3 FY26, compared to a loss of ₹61.40 crores in the same period last year, demonstrating strong operational recovery and financial discipline.

Outstanding Q3 FY26 Financial Performance

The company achieved remarkable financial results during the quarter, with several metrics reaching new highs. The turnaround to profitability was supported by robust revenue expansion and exceptional EBITDA improvement, contrasting with most other cement producers whose profits declined sequentially due to GST-related price revisions.

The company achieved its highest third-quarter consolidated volume of 5.00 million tonnes, representing a 6.38% increase year-on-year. This volume growth translated into strong revenue performance, with total income reaching ₹2,700.00 crores, marking a 12.03% improvement compared to Q3 FY25. The earnings met analyst expectations and surpassed the September quarter performance.

Exceptional Profitability and Margin Expansion

EBITDA performance stood out as a key highlight, surging 48.84% year-on-year to ₹384.00 crores from ₹258.00 crores in Q3 FY25. The EBITDA margin expanded significantly to 14.22% in Q3 FY26 from 10.70% in the corresponding quarter last year, reflecting a substantial improvement of 352 basis points.

The company maintained its industry-leading premiumization at 44% for consecutive quarters, achieving an all-time high for the second quarter in a row. This demonstrates sustained customer preference for premium products, with growing recognition for the Nuvoco Concreto and Nuvoco Duraguard franchises as preferred choices across building material applications.

Operational Excellence and Market Recovery

Despite early macroeconomic challenges from prolonged monsoon and festivities that softened demand in October and November, December saw healthy double-digit growth, demonstrating strong recovery momentum. The company's performance showcases operational excellence amid challenging market conditions.

Strategic Capacity Expansion and Debt Management

Nuvoco Vistas is advancing ambitious expansion plans to increase annual capacity by 10 million tonnes to 35 MT by the next fiscal year. This expansion will be backed by a 4-million-tonne organic expansion in east India and the acquisition of Vadraj Cement in west India, which has a capacity of 6 million tonnes.

The company ended the December quarter with debt of ₹4,217.00 crores, up from ₹3,492.00 crores as of September-end, but down from ₹4,350.00 crores in December of the previous year. Over the medium term, the company will consider brownfield expansion at Chittorgarh, Rajasthan, and greenfield expansion at Gulbarga, Karnataka.

Management Commentary and Future Outlook

Jayakumar Krishnaswamy, Managing Director of Nuvoco Vistas Corporation, highlighted the company's resilience during challenging market conditions. "Despite early macroeconomic challenges from prolonged monsoon and festivities that softened demand in October and November, December saw healthy double-digit growth, demonstrating strong recovery momentum," he stated. "The company delivered its highest-ever third quarter volume and a 49% YoY rise in EBITDA, driven by a sustained focus on premiumisation and operational excellence."

Currently having presence only in east and north India, the Vadraj acquisition will provide Nuvoco with 17% of its capacity in west India, significantly enhancing its geographic footprint and market reach across the country.