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Equirus
Nesco (Long)
CMP: ₹440.15
Target: ₹603
Nesco is a holding company. The company is engaged in activities, including information technology (IT) park (building private IT park and providing space on license basis); exhibition and convention centre (providing space to trade fairs, exhibitions, conventions and conferences); manufacture of machinery, equipment and capital goods (in the surface preparation and allied sectors), and investments (investing funds in mutual funds and securities). Its segments include Nesco IT Park, Bombay Exhibition Centre, Indabrator, and Investment and other income.
Nesco's 2QFY19 revenues/EBITDA grew 21 per cent/12 per cent y-o-y to ₹100 crore /₹66 crore, beating EE by 14 per cent/7 per cent largely on account of strong BEC business performance (+21 per cent y-o-y; +19 per cent versus EE). Operational performance of the IT Park division was broadly in line with our expectation; also, progress on IT Park-4 was on expected lines, while new capacities in NBEC and construction of IT Park-5 would fall under the company’s next leg of expansion. Mid-to-long-term growth prospects seem encouraging supported by Nesco’s strong expansion pipeline. We hence assign Long (from ADD previously) to the stock with a SOTP-based March 2020 TP of ₹603 (₹600 earlier).
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