Buy Nuvoco Vistas Corporation Ltd for Target Rs. 500 by Choice Institutional Equities
Key Conference Call Highlights
Guidance and outlook
* Cement industry demand expected to grow 7–9% in FY27, with NUVOCO targeting similar volume growth
* Management expects demand recovery to accelerate as labour returns to key market post elections
* Near-term profitability likely to remain under pressure due to fuel, currency and raw material inflation
Cost inflation headwinds
* Total cost inflation estimated at approximately INR 200/t during April
* Fuel costs expected to increase to INR1.51–1.55/mn cal in Q1FY27 from INR1.44/mn cal in Q4FY26. Petcoke cost increased from INR1.84 to INR2.01/mn cal
* Imported gypsum cost are expected to add another INR20/t pressure
Packaging cost shock
* Granule prices surged sharply from INR 99/kg in February to INR 155/kg. Packaging bag cost expected to rise by around INR 100/t in Apl
* Bag shortages continue across the industry, especially in East India, where manufacturer utilisation exceeds 90%
Pricing actions
* Trade price hikes of around INR10/bag implemented in both East and North markets. Non-trade price hikes ranged between INR10–20/bag depending on region
* Management remains confident that current price hikes will sustain and additional price increases remain an option if cost inflation continues
Capacity expansion
* Vadraj Cement project progressing as planned with commissioning between Q3FY27 and Q1FY28
* East expansion to add 4 MTPA grinding capacity through FY28
* New 1.5 MTPA bulk cement terminal at Viramgam, Gujarat targeted for FY28 commissioning
Capital allocation
* FY27 Capex guidance at INR 9 Bn and FY28 Capex guidance at INR 9.6 Bn
* Majority of investments earmarked for Vadraj refurbishment and East expansion projects
* Target leverage maintained at 2.0x–2.5x EBITDA
For Detailed Report With Disclaimer Visit. https://choicebroking.in/disclaimer
SEBI Registration no.: INZ 000160131
