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India Ratings and Research has put Nuvoco Vistas Corporation Ltd’s long-term rating ‘Ind AA’ under rating watch evolving (RWE), days after the company acquired a 100-per cent stake in Emami Cement Ltd.
The enterprise value of the acquisition, announced on February 6, is ₹5,500 crore, which includes an equity value of ₹2,300 crore and debt of ₹3,200 crore on Emami Cement’s balance sheet.
“NVCL is likely to finance the equity value through fresh equity/quasi equity infusion, the source of which will be finalised over the next few days,” India Rating said in a note.
The rating agency believes that the acquisition will significantly strengthen NVCL’s market position, making it the sixth-largest cement manufacturer in India and the largest in the eastern region, it said.
The combined entity’s EBITDA could exceed ₹2,000 crore in FY21 with EBITDA-per-tonne of over ₹1,000, “comparable” to most of the major players in the industry, but may “delay NVCL’s deleveraging plan by a year”, the note said.
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