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Quick Pointers

* Nuvoco implemented price hikes of ~INR8-12/bag in trade and ~INR10–15/bag in non-trade segments

* Overall cost inflation of ~INR200/t, expected to be mitigated through price hikes and cost efficiencies.

Nuvoco Vistas (NUVOCO) delivered better than expected operating performance in Q4FY26, aided by improved cement prices and 5% YoY volume growth. Blended NSR increased 3% QoQ, driven by higher cement prices, particularly in the eastern region, while premium product share remained healthy at 44%. Despite an increase in RM and power & fuel costs due to higher input and pet coke prices, strong operating leverage and pricing led to EBITDA/t improving to INR983 (PLe INR847). The company has implemented price hikes of ~INR8-12/bag (trade) and ~INR10-15/bag (non-trade), which will largely offset cost inflation in Q1FY27. However, with fuel and packaging costs expected to remain elevated over the next 1-2 quarters, margin pressures may persist, partly mitigated by further price hikes and cost optimisation initiatives; provided demand remains supportive by infrastructure and housing. The Vadraj refurbishment remains on track, with trial operations expected in H1FY27 and commissioning between Q3FY27 and Q1FY28.

With a strong exit to FY26 led by improved realizations, Nuvoco enters FY27 on a better footing. The ongoing expansion through Vadraj and eastern region debottlenecking is expected to strengthen its regional positioning and support incremental growth. However, near-term earnings visibility remains contingent on further price hikes, as elevated costs are expected to keep margins under pressure. While a supportive demand environment should aid price sustainability, earnings sustainability remains closely linked to the company’s ability to pass on cost inflation. With continued focus on cost optimisation and capacity ramp-up, Nuvoco is well placed to deliver earnings growth over the next two years, provided pricing sustains and execution remains on track. We tweak our EBITDA estimates by -0.3/0.4% on higher costs and pricing and expect it to deliver EBITDA CAGR of 9% over FY26-28E. The stock is trading at EV of 7.5x/6.3x FY27E/FY28E EBITDA. Maintain ‘BUY’ with revised TP of Rs474 (earlier Rs468) valuing at 9x EV of Mar’28E EBITDA.

Other important highlights:

* Industry to grow at ~7-9% in FY27, with the company targeting similar growth.

* Blended fuel cost to rise to INR1.51-1.55/mcal in Q1, with further increase in Q2.

* Capex to be INR9bn and INR9.6bn in FY27 and FY28 respectively. Targeting Net Debt/EBITDA of ~2.0–2.5x.

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