The IPO of Nuvoco Vistas Corporation, part of the Nirma Group, will open for public subscription on August 9 and close on August 11. The cement manufacturer is looking at raising Rs Rs 5,000 crore through an initial public offering (IPO).
The price band of the IPO is fixed at Rs 560-570 per share. The IPO will consist of fresh issuance of equity shares, worth up to Rs 1,500 crore and an offer for sale of equity shares worth up to Rs 3,500 crore, by Niyogi Enterprise Private Limited.
The proceeds from fresh issuance will be largely used to repay certain borrowings (Rs 1,350 crore) and the rest will be used for general corporate purposes.
Debt
Commenting on debt, Hiren Patel, Chairman, Nuvoco Vistas Corporation Limited and promoter of the company said, “The company has a debt worth Rs 6,685 crore. We will pay part of the debt with IPO proceeds.”
Adding to this, Jayakumar Krishnaswamy, Managing Director, Nuvoco Vistas Corporation said post IPO in the next 24 months, the company will retire more debt. He added the absolute EBITDA will increase in the coming 12-18 months. By the end of fiscal 2023, our EBITDA to debt ratio will be less than 1.2. In the industry we are in, these levels are very comfortable.” The rise in EBITDA will be mainly on account of synergy between Emami Cement Limited, now known as NU Vista Limited and Nuvoco Vistas.
Jayakumar Krishnaswamy, Managing Director, Nuvoco Vistas Corporation | edfotografii
Growth
The company in the last five years has witnessed growth coming from the central (Uttar Pradesh and Madhya Pradesh) and eastern (Odisha, Bihar and West Bengal) regions due to a surge in infrastructure construction and rural housing. Krishnaswamy added, “We are the largest in the East region. Around 8-9 per cent growth will come from the East.” Meanwhile, over the past five years, cement demand grew at a CAGR of approximately 5 per cent.
Commenting further on the growth strategy of the company, Hiren Patel stated, “The company will be generating enough cash flow to set up one cement line every two years. This is the only business vertical that the company has. So, there will be substantial scale-up in profitable capacities in future.” In addition, he also added the company has been active in the merger and acquisition space, however, it sees no viable project to invest in. But the company will keep an eye for inorganic growth or any brownfield projects.
At present, the company has 11 cement plants comprising five integrated units, five grinding units and one blending unit. It operates cement manufacturing units in Chhattisgarh, Jharkhand, West Bengal, Rajasthan and Haryana.
From 2.28 MMTPA cement capacity in 2014, the company in 2020 has a capacity of 22.32 MMTPA. It was 10 times capacity growth.
