Nuvoco Vistas Q2 Results Review - Weak Volumes Affected Operational Performance: PL Capital

PL Capital Report

Nuvoco Vistas Corporation Ltd. reported weak operating performance in Q2 FY25 on sharp 6% YoY decline in volumes due to weak demand in the monsoon quarter. Average net sales realisation declined 2.6% QoQ on weak cement pricing in eastern markets. Ebitda/tonne declined 30% YoY due to lower operating leverage. Management expects domestic cement demand to improve gradually post festivities, once Government of India projects get funding and demand starts rolling in across states.

Cost optimization measures such as railway sidings and usage of waste heat recovery system are expected to improve Ebitda/tonne by Rs 75 in the near term.

Current debt level of the company hinders the growth plan, which we expect would result in market share loss in the medium term. Key things to watch out for:

1. spending on infrastructure projects and housing in eastern states,

2. stability of pricing amidst rising capacities in the East, and

3. early repayment of debt, which is hindering capex plans.

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