ICICI Securities Maintains HOLD on Nuvoco Vistas, Sets ₹369 Target
Overview
ICICI Securities has maintained a 'HOLD' rating on Nuvoco Vistas Corporation, revising its target price to INR 369 from INR 400. The brokerage acknowledged strong EBITDA growth in Q3FY26, driven by efficient cost management despite falling realizations. However, concerns over rising competitive intensity, upcoming capacity additions, and persistent debt issues led to a pruning of future earnings forecasts and a cautious outlook.
Stocks Mentioned
Q3FY26 Performance Analysis
Nuvoco Vistas Corporation's third-quarter fiscal year 2026 earnings before interest, taxes, depreciation, and amortization (EBITDA) registered a robust 49% year-over-year increase. This performance met expectations, even as the company grappled with a steeper-than-anticipated 4.6% sequential decline in realizations. Stellar cost management proved to be the key differentiator, with variable costs easing by 3% quarter-over-quarter, significantly outperforming the brokerage's flat estimate. This operational efficiency helped cushion the impact of a challenging pricing environment.
Outlook and Earnings Forecast
Looking ahead, the onset of the busy construction season from January to May provides grounds for optimism regarding price recovery, aligning with management commentary. Despite this, ICICI Securities has opted to trim its fiscal year 2026 and 2027 EBITDA estimates by approximately 6% and 7%, respectively. This adjustment incorporates observations of heightened competitive dynamics in the third quarter, the potential market disruption from an estimated 185 million tonnes per annum capacity addition slated for fiscal years 2026 through 2028, and a recalibration based on the performance during the first nine months of fiscal year 2026.
Valuation and Rating Retained
Sticky debt levels remain a significant overhang for Nuvoco Vistas Corporation, limiting the scope for an upward revision in valuation multiples. The brokerage continues to value the company using a 9 times fiscal year 2027 enterprise value to EBITDA multiple. Consequently, ICICI Securities reiterates its 'HOLD' recommendation, adjusting the price target downwards to INR 369 from the previous INR 400, signaling a neutral stance on the stock amidst these prevailing concerns.
