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Nirma group cement company Nuvoco Vistas Corporation Ltd has filed draft red herring prospectus with capital markets regulator SEBI to launch an IPO worth Rs 5,000 crore. The issue will comprise a fresh issue of shares of up to Rs 1,500 crore and an offer-for-sale (OFS) of up to Rs 3,500 crore by its promoter selling shareholder Niyogi Enterprise Private Ltd which holds 86.56 per cent stake in the company. Nine years ago Nirma shares were delisted from exchanges. Billionaire Karsanbhai Patel founded Nirma Group, his son Hiren Patel is currently the chairman of Nuvoco Vistas.
The book running lead managers to Nuvoco Vistas Corporation issue are ICICI Securities, Axis Capital, HSBC Securities and Capital Markets (India) Private Ltd, JP Morgan India Private Ltd, and SBI Capital Markets Ltd. The registrar to the issue is Link Intime India Private Ltd. Upon listing, Nuvoco Vistas Corporation will join the likes of Ultratech Cement, Shree Cement, Ambuja Cements and ACC Ld. The highest industry P/E ratio stands at 61.91, the lowest industry P/E ratio is 23.05 and the average industry P/E ratio is 35.46. The company has planned to utilise the net proceeds from the issue for the repayment/prepayment/redemption, in full or part, of certain borrowings availed of by the company which is about Rs 1,350 crore and for general corporate purposes.
Nuvoco Vistas reported a net loss of Rs 63.4 crore and Rs 26.4 crore in the nine month period ended December 31, 2020 and Fiscal 2019 respectively. Nuvoco Vistas’ business, financial condition and results of operations have been and may continue to be materially adversely affected by the COVID-19 pandemic. The company said that the recently enacted Mines and Minerals (Development and Regulation) Amendment Act, 2021 may result in lapsing of letters of intent for the grant of mining leases under Section 10A of the MMDR Act. In addition, the Amendment Act may also impact the continuity of certain non-operating mining leases.
Nuvoco Vistas is the fifth largest cement company in India in terms of capacity with a consolidated capacity of 22.32 MMTPA. According to a CRISIL report, the cement demand in India is expected to grow at a CAGR of 6% to 7% from fiscal 2021 to fiscal 2026. Nuvoco Vistas’ competitors from domestic cement companies which operate in the Indian market, include UltraTech Cement Limited, Shree Cement Limited, Birla Corporation Limited, Dalmia Bharat Cement Limited, Ambuja Cement Limited and other regional players like Wonder. The company said that its cement products are sold to the trade segment (which is mainly to individual home buyers through their distribution network) and the non-trade segment (which is mainly direct sales to institutional and bulk buyers).