Comments
Kotak Securities
NESCO (Buy)
CMP: ₹537.15
Target: ₹611
Established in 1939 as the New Standard Engineering Company Ltd (NSE), the company changed the name from New Standard Engineering Company to NESC0 Ltd.
The management proposed to invest ₹1,500 crore for the expansion of IT Parks, Bombay Exhibition Centre and Nesco Hospitality. It has expressed its commitment to finance these expansions from own resources, without any borrowings, and to remain debt free.
In our vision, its land bank holds substantial intrinsic value.
Outlook and valuation: The stock has got corrected by around 14 per cent from its 52-week high and is trading at 19x its FY2018E EPS of ₹26.69 and at 16.8x its FY2019E EPS of ₹30.16. Despite such cash and land bank, NESCO trades at 19x its FY2018 expected EPS. We expect its revenue and profits to keep growing consistently in future due to the nature of its business models. Hence, we initiate a ‘buy’ on the stock with a conservative target price of ₹611 which is 20x its FY2019E EPS.
Risks: Any possible severe deflationary trend in the Indian industrial economy could impact adversely its exhibition business.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.