Raytheon awarded $71 million in Navy contracts for missile systems
On Thursday, ICICI Securities adjusted its stance on Nuvoco Vistas (NSE:NUVO) Corp Ltd (NUVOCO:IN), downgrading the stock rating from Buy to Hold and reducing the price target to INR 369.00 from INR 422.00. This decision follows Nuvoco's recent performance, where the company saw a significant year-over-year volume increase of 17%, but also experienced a notable decline in both realization and EBITDA.
The volume surge for Nuvoco was compared to a low base from the previous year, which had seen an 11% volume drop in the third quarter of the fiscal year 2024. Despite the increase in volume, the company's realization fell by 4.7% quarter-over-quarter and was down by 15% compared to the same period last year. This decrease in realization contributed to a 37% year-over-year EBITDA decline, which also fell short of ICICI Securities' expectations by 8%.
ICICI Securities has adjusted its EBITDA forecasts for Nuvoco, reducing estimates by 5% for the fiscal year 2025 and by 10% for the fiscal year 2026. The firm cites several reasons for the downgrade, including the impact of Nuvoco's recent acquisition of Vadraj Cement in Gujarat.
Analysts at ICICI Securities believe that this acquisition presents new challenges for Nuvoco, such as maintaining a high net debt ratio, which is expected to exceed 2.5 times. They also note that tangible benefits from the acquisition are not anticipated until fiscal year 2028, with cash outflows starting in fiscal year 2026.
The analysts express concerns about Nuvoco's foray into the West India market through this acquisition. They point out that West India is a relatively new market for Nuvoco, with a significant non-trade exposure that could potentially result in lower profitability in the initial years of operation.
In light of these observations, ICICI Securities maintains its valuation of Nuvoco at 9 times the fiscal year 2026 estimated EV/EBITDA, even as the price target has been revised downward. The downgrade to a Hold rating reflects the firm's cautious outlook on Nuvoco's near-term financial performance and strategic moves.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.