ICICI Securities has reiterated a BUY rating on Nuvoco Vistas Corporation (NVCL), projecting a target price of INR 590 — an upside potential of nearly 40% from its current market price of around INR 420. The brokerage’s confidence stems from the company’s expansion-led growth strategy, operational efficiencies, and an improving demand outlook across housing and infrastructure sectors.
Nuvoco, India’s fifth-largest cement manufacturer with 25 million tonnes per annum (MTPA) capacity, is progressing toward an ambitious target of 35 MTPA by FY27, driven by both organic and inorganic expansion initiatives.
Nuvoco Vistas Q2 FY26 Performance: Profitability on the Rise
For the quarter ended 30 September 2025, Nuvoco Vistas reported:
- Revenue: INR 2,457.6 crore, up 8.3% YoY (down 14.5% QoQ)
- Sales Volume: 4.30 MTPA, up 2.4% YoY
- EBITDA per tonne: INR 853, up 63.9% YoY
- EBITDA: INR 367 crore, a 67.8% YoY jump
- PAT: INR 36.4 crore, compared to a loss of INR 85.2 crore in Q2 FY25
Capacity utilization stood at around 69% during the quarter. Management attributed the subdued sequential performance to an extended monsoon and early festive season, which temporarily affected construction demand.
For the first half of FY26, revenue grew 8.7% YoY, supported by a 4.4% rise in sales volume and 4% improvement in realization, while EBITDA per tonne averaged INR 942, compared to INR 625 in the same period last year.
Expansion Roadmap: 10 MTPA by FY27
Nuvoco’s near-term growth will be underpinned by a 10 MTPA capacity addition plan, comprising:
- 6 MTPA through Vadraj Cement acquisition in Gujarat
- 4 MTPA via debottlenecking and grinding unit upgrades across the East region (Arasmeta, Jojobera, Panagarh, Jajpur)
The Vadraj project—funded through INR 600 crore debt and INR 1,200 crore Compulsory Convertible Debentures (CCDs)—is on schedule for commissioning by Q3 FY27, with trial runs expected in H1 FY27. The CCD structure, being quasi-equity, will not dilute Nuvoco’s existing shareholders.
In the East, incremental capacity of 1 MTPA each will come online sequentially in December 2025, March 2026, June 2026, and FY27, with a total investment of less than INR 200 crore. These expansions are expected to consolidate Nuvoco’s leadership in Eastern India while providing entry into high-potential markets such as Telangana, East Uttar Pradesh, Madhya Pradesh, and the North-East.
Operational Efficiency and Premiumization Drive Margins
ICICI Direct expects EBITDA per tonne to climb steadily to INR 1,184 by FY28, up from INR 707 in FY25, supported by:
- A higher share of premium cement (44% of trade volumes in Q2 FY26)
- Increased use of renewable power and alternative fuels (AFR)
- Enhanced logistics efficiency through improved rail-road mix
- Cost optimization in raw materials and fuel sourcing
The company also targets a 150–200 basis points increase in premium share through product innovation and brand-led demand. Realizations are expected to improve by INR 25–50 per tonne in the second half of FY26.
Financial Outlook: Earnings Acceleration Ahead
ICICI Direct projects:
- Revenue CAGR (FY25–FY28): ~12%
- EBITDA CAGR (FY25–FY28): ~30%
- PAT CAGR (FY25–FY28): ~265%
Despite capital expenditure of around INR 4,100 crore between FY26 and FY28, Net Debt/EBITDA is forecast to improve to ~2x by FY27, from 2.7x in FY25, reflecting disciplined capital management.
At current valuations of 8.8x EV/EBITDA and USD 64 per tonne (FY27E), the brokerage views the stock as attractively priced relative to peers.
Industry and Demand Outlook
Cement demand, though temporarily dampened by weather disruptions and the GST rate adjustment, is poised to recover in H2 FY26, driven by:
- Government infrastructure spending: ~62% of central and ~80% of state capex yet to be utilized
- GST cut from 28% to 18%, improving affordability
- Revival in housing activity amid lower borrowing costs
Nuvoco Vistas’ management anticipates 7–8% demand growth in H2 FY26, with the company targeting 1.2–1.5x the industry growth rate in its core markets.
Risks to Outlook
Key risks highlighted include:
- Demand slowdown due to prolonged monsoons or muted infrastructure spending
- Execution delays in capacity expansion projects
- Volatility in fuel and raw material costs
- Intensifying competition in regional markets
Bottom Line
ICICI Direct’s bullish stance on Nuvoco Vistas underscores growing confidence in the company’s ability to leverage expansion, premiumization, and efficiency initiatives to deliver strong earnings growth over the next three years. With a robust balance sheet, disciplined capex strategy, and sectoral tailwinds, Nuvoco is well-positioned to emerge as a major force in the Indian cement industry by FY27.
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