Buy Nuvoco Vistas Ltd for the Target Rs. 560 by Choice Institutional Equities
* Outlook: We reiterate our BUY on NUVOCO with a revised TP of INR 560 (vs. INR 480) post-Q1FY26, factoring in: (1) 4 MTPA capacity addition by FY27 at a low cost (INR 2 Bn), taking total capacity to 35 MTPA, (2) improved volumes, realizations, EBITDA/t, and cost savings (INR 50/t in FY26E) along with premiumization, and (3) higher EV/CE multiple (1.6x) on the back of ROCE expansion. We remain positive on NUVOCO’s balance sheet despite 2.0x leverage, with ROCE set to rise sharply from 3.9% in FY25 to 15.9% in FY28E. NUVOCO has stayed among our top cement picks since May 2025.
* We project NUVOCO’s EBITDA to grow at 31.4% CAGR over FY25-28E, driven by volume growth of 6%/8%/10% and realization growth of 6%/1%/1% in FY26E/27E/28E, respectively. We remain positive on NUVOCO’s strategy of premiumization, higher trade share, and expansion into the western region via Vadraj Cement acquisition.
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