NUVOCO VISTAS CORPORATION

Rising star in cement firmament

Nuvoco Vistas Corporation (NVPL) is the fifth largest cement group in India and one of the leading players in East India in terms of capacity. Its businesses consist of cement, ready-mix concrete and modern building materials, which include a range of over 60 products which meet the needs of individual home builders and institutional infrastructure developers.

Nuvoco provides best-in-class cement products such as Concreto, Duraguard, Double Bull, Premium Slag Cement, Nirmax and Infracem. It has 11 cement plants across 7 states with a total capacity of 25 million tonnes per annum (mtpa). Over the last five years, it has been doubling its installed capacity and establishing itself as one of the fastestgrowing cement companies in the country. It operates 56 ready-mix concrete plants across India.

Operations of the company are spread across West Bengal, Bihar, Jharkhand, Chhattisgarh, Delhi, Haryana, Rajasthan, Gujarat, Uttar Pradesh, Madhya Pradesh, Delhi and Odisha. Niyogi Enterprise Private Limited and promoters of the Nirma group hold about 71.8% in NVCL post-IPO and Nu Vista Limited is a 100% subsidiary of NVCL.

ACQUISITION GAIN

The company is doing quite well on the financial front. What is more, its prospects going ahead are all the more promising. Consider:

• It has a strong market position following acquisition of Nu Vista Limited (NVL). NVCL on its own was operating at a very high capacity utilization. With the acquisition of NVL, it increased its installed capacity (NVCL+ NVL) and has become a leading player in the eastern region. Following the acquisition, the market position of NVCL has improved, with overall capacity of 25 mtpa across plants in Chhattisgarh, Jharkhand, Bihar, Odisha, Rajasthan and West Bengal. The presence of the split grinding units of Nu Vista Limited across the eastern states and an integrated unit in Chhattisgarh complements the plants of NVCL in the eastern region.
• Furthermore, in the northern region, NVCL has an integrated plant in Chittorgarh (Rajasthan), a split blending unit in Haryana and an integrated unit in Nimbol (Rajasthan). These units will benefit from synergies, including rationalization of the marketing network and cost savings because of the ramp-up in the scale of operations.
• NVCL has its own captive limestone mines and clinker capacity, and has set up captive power plants and waste heat recovery systems across various plants. The established market position is supported by strong brands, such as Duraguard, Double Bull, Concreto and Infracem, and an extensive network of dealers and sub-dealers of NVCL and NVL. A strong brand equity provides the ability to command a premium for products. With the acquisition, NVCL got access to adequate limestone reserves, which will benefit its business over the medium term. The presence of grinding units in key states will help in product optimization as well as increase market reach over the medium term. Softening input costs will improve profitability going forward.

CAPTIVE POWER

• NVCL has been setting up a thermal and waste heat recovery-based power capacity over the past few years; its total power plant capacity stood at 196.2 MW (44.7 MW waste heat recovery systems, 1.5 MW solar power and 150 MW CPP). Post this, the company’s 60%-70% power requirements could potentially be met by captive sources, leading to cost saving

In FY 2024, sales grew 1% to Rs 10,732.9 crore. PAT was up 829% to Rs 147.37 crore.

In FY 2025, we expect the company to register EPS of Rs 8.8, which is likely to rise to 11.2 in FY 2026. The scrip trades at Rs 170. P/E on FY 2026 EPS works out to 15.1.

PERFORMANCE INDICATORS (Rs. in crore)

PARAG MILK FOODS

Dairy queen of private sector

Parag Milk Foods, the largest private dairy FMCG company in India, is a leading manufacturer and marketer of dairybased branded products in India

The company has three state-of-the-art manufacturing plants at Manchar in Maharashtra, Palamaner in Andhra Pradesh, and Sonipat in Haryana. It has a milk processing capacity of 3.4 million litres/day, a whey processing capacity of 12 lakh litres/day, a ghee & cheese processing capacity of 140 mt/day, a lactose processing capacity of 40 mt/day and a paneer processing capacity of 20 mt/day.

The company manufactures and sells milk and milk-based products under famous brand names such as Gowardhan, Go, Topp Up, Avvatar and Pride of Cows. Its product portfolio includes ghee, fresh milk, skim milk powder, whole milk powder, paneer, an array of processed and natural cheese, cheese spreads.

BOOMING SALES

Parag is steadily growing in its financial performance. During the last 12 years, its sales turnover has expanded more than three times – from Rs 925 crore in fiscal 2013 to Rs 1,339 crore, with operating profit inching up from Rs 83 crore to Rs 197 crore and the profit at net level shooting up more than four times from Rs 21 crore to Rs 91 crore. What is more, prospects for the company going ahead are all the more promising. Consider

• Along with catering to domestic needs, the company supply its products to 20+ countries. Its flagship brand, Gowardhan Ghee, has more than a 20% marketshare in the cow ghee category and its young and fun-loving brand, Go cheese, has more than a 35% marketshare.
• The company has a substantial distribution network of over 5 lakh retail touchpoints, 6200+ distributors, 600+ super stockists, and 29 depots spread across India. Additionally, it has developed strong partnerships with more than 5 lakh farmers worldwide and receives 100% cow milk from important milk belts
• Rural consumers often rely heavily on dairy products, making them a key growth driver for the company. During the quarter ended March 2024, rural demand outpaced urban markets for fast moving consumer goods for the first time in five quarters, signaling a turnaround after 15 months of sluggish demand.

RURAL THIRST

• As per NielsenIQ, the FMCG sector grew 6.6% YoY by value led by rural consumption during the quarter ended March 2024. In FY25, rural demand is expected to further improve, driven by a robust rabi crop, a bumper wheat crop and government measures like an increase in MSP and higher spending on MNREGA. This augur wells for the company, given its strategy to expand its reach in rural areas.
• Amidst the buoyant Indian economy, the dairy industry is experiencing a boom driven by changing consumer preferences, technological advancements and the introduction of innovative value-added products. Moreover, the shift from an unorganized sector to an organized sector, and the rising consumption of products should further augment industry growth.
• To capitalize on this growing demand, Parag is strengthening its presence in backend operations. The company has implemented backward integration through its Bhagyalaxmi dairy farm, which serves as the foundation for the premium offerings sold under the brand ‘Pride of Cows’

MILKY DREAMS

The company aims to expand its milk production capacity to 140,000 litres in the future, accompanied by a cattle capacity of approximately 15,000. Consumer demand is growing rapidly and the company is geared to meet this rising demand.

n FY, 2024 sales grew 9% to Rs 3,138.70 crore. PAT was up 70% to Rs 90.58 crore. In FY 2025, we expect the company to register EPS of Rs 8.8, which is likely to rise to 11.2 in FY 2026. The scrip trades at Rs 170. P/E on FY 2026 EPS works out to 15.1

PERFORMANCE INDICATORS (Rs. in crore)