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Nuvoco Vista Corporation IPO: GMP, Subscription Status, Key Risks, Should you Buy?

The company was incorporated in 1999 and is a part of the Nirmal Group of Companies.

The company was incorporated in 1999 and is a part of the Nirmal Group of Companies.

The Nuvoco Vista IPO has an issue size of Rs 5,000 crore, a fresh issue of Rs 1,500 crore and an OFS that come up to Rs 3,500 crore.

The Nuvoco Vista Corporation Limited opened its initial public offering (IPO) on Monday. The issue was subscribed 0.16 times after the first day of bidding. The individual retail investors for the issue had subscribed a total of 0.31 times on the first day. The non-institutional investors (NIIs) had bought 189,176 equity shares against their allotted portion of 1.33 crore equity shares. The qualified institutional buyers (QIBs) on the other hand put in bids for 364 equity shares against their reserved portion of 1.78 crore shares. Nuvoco Vistas had reduced the size of the issue from 8.77 crore equity shares to 6.25 crore equity shares. This comes after the company managed to raise Rs 1,500 crore from its anchor investors prior to the issue opening, on August 6. The issue opened on Monday and is planning to close subscriptions on August 11.

The QIB segment of investors had a reservation of 50 per cent for the public issue. The NIIs on the other hand only had a 15 per cent reservation for the Nuvoco Vista IPO. The retail investors for the issue enjoyed a 35 per cent reservation of shares. In terms of lot size, the lot for the issue stood at 26 shares at the lower end and carried an application amount of Rs 14,820. The upper limit of the lot carried 338 shares that came with an application amount of Rs 192,660. Retail investors were allowed to apply for up to 13 lots at the higher end of the lot size.

The Nuvoco Vista IPO has an issue size of Rs 5,000 crore that consisted of a fresh issue and an offer for sale (OFS). The fresh issue aggregates up to Rs 1,500 crore and the OFS aggregates to Rs 3,500 crore. The public issue carried a Rs 10 per equity share face value and a price band of Rs 560 to Rs 570 per equity share.

The grey market premium (GMP) of the IPO stood at Rs 20, which indicated that the shares were trading at Rs 580 to Rs 590 on the unlisted grey market on August 10. The previous day’s GMP was Rs 40 and the shares were trading at Rs 600 to Rs 610 on the grey market.

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The company was incorporated in 1999 and is a part of the Nirmal Group of Companies, which is one of the largest cement and concrete manufacturers in India. It specialises in a diverse range of products such as cement, Ready-mix Concrete (RMX), and modern building materials like adhesives, wall putty, dry plaster, cover blocks and so on. The company’s main targets are individual home buyers and institutional/bulk buyers in the non-trade segment. It has a strong distribution network of 15,969 dealers and 225 CFAs. The company has cement and manufacturing plants in West Bengal, Bihar, Odisha, Chhattisgarh, Jharkhand, Rajasthan and Haryana.

Should you Subscribe to the Nuvoco Vistas Corporation Limited IPO?

Speaking on the company’s growth over time, Ventura Securities said, “Over the period FY19-21, revenue has grown at a CAGR of 3% to INR 7,488.8 cr despite disruptions caused by the Covid-19 pandemic. EBITDA grew at a faster pace of 26.2% to INR 1,460.5 cr (EBITDA margin +650bps to 19.5%, EBITDA/tonne +INR 233 to INR 966 cr). The company incurred a loss of INR 26.5 cr in FY19, a profit of INR 249.3 cr in FY20 but suffered a loss again in FY21 to the extent of Rs INR 25.9 cr. Deferred tax expense for the year ended March 31, 2021 includes Rs 54.2 cr being one-time tax impact of goodwill taken out of purview of tax depreciation w.e.f. 1 April 2020 by Finance Bill enacted in March 2021.”

Speaking on the investment rationale for this IPO, Angel Broking said, “The sizeable production capacity coupled with its successful growth by acquisition has worked in favour of this cement manufacturing company. Collectively, these factors manifest as positive upsides for this company.”

Angel Broking then added, “Investors willing to partake in this upside phase of the infrastructure industry, in general, could consider subscribing to this upcoming IPO shares. However, investors must make it a point to gain substantial information about Nuvoco Vistas, its prospects, and the sectoral limitations to make an informed choice.”

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first published:August 10, 2021, 12:17 IST