{"id":102212,"date":"2018-11-27T13:30:28","date_gmt":"2018-11-27T13:30:28","guid":{"rendered":"https:\/\/www.bnreport.com\/buy-nesco-target-rs-603-equirus-securities\/"},"modified":"2018-11-27T13:30:28","modified_gmt":"2018-11-27T13:30:28","slug":"buy-nesco-target-rs-603-equirus-securities","status":"publish","type":"post","link":"https:\/\/www.bnreport.com\/en\/buy-nesco-target-rs-603-equirus-securities\/","title":{"rendered":"Buy Nesco, target Rs 603: Equirus Securities"},"content":{"rendered":"

Equirus<\/a> Securities has a buy call on Nesco with a target price of Rs 603. <\/p>\n

The current market price of Nesco is Rs 434.10. <\/p>\n

Time period given by the brokerage is one year when Nesco price can reach the defined target. <\/p>\n

Investment rationale by the brokerage:<\/strong>
NESCO's 2QFY19 revenues\/EBITDA grew 21 per cent\/12 per cent YoY to Rs 1bn\/Rs 660mn, beating EE by 14 per cent\/7 per cent largely on account of strong BEC business performance (+21 per cent YoY; +19 per cent vs. 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 companys next leg of expansion. Mid-to-long-term growth prospects seem encouraging supported by NESCOs strong expansion pipeline. We hence assign LONG (from ADD previously) to the stock with a SOTP-based Mar20 target price of Rs 603 (Rs 600 earlier). <\/p>\n

BEC biz drives 2Q beat:<\/strong> BEC business performance (+21 per cent YoY) surpassed expectations (19 per cent above EE) driven by a one-off exhibition from the Ministry of Commerce which contributed nearly Rs 90mn to revenues; adjusting for this, BEC performance would have been largely in line with EE. EBIDTA margins contracted 536bps YoY to 66 per cent, falling 386bps short of EE amid higher-than-expected revenue contribution from Hospitality and Indabrator business divisions. We raise FY19E revenue estimates largely to factor in the 2QFY19 beat but slightly trim FY19E\/FY20E EPS estimates on lower other income assumptions (owing to lower cash due to future capex requirements). <\/p>\n

BEC biz back to normal post BMC issue:<\/strong> Post the BMC notice \u2014 which barred NESCO from hosting any event at BEC until the completion of the Andheri-Dahisar Metro construction along the highway \u2014 things seem to be back to normal for the company. While certain documentation\/permission requirements have increased, nothing seems to be alarming. Also, approvals are coming in smoothly for exhibitions. <\/p>\n

Initial response to IT Park-4 promising:<\/strong> Construction activity at IT Park-4 is nearing completion and NESCO has already engaged with prospective clients. With 39 units for offering (3 units\/floor), NESCO has already entered into a contract for 2 units. Further, it has signed and is likely to sign LOI for a few units in the coming weeks. Some existing clients from IT Park-3 are showing interest for additional space as well. Overall, initial signs seem encouraging for IT Park-4 leasing. <\/p>\n

Expansion plans:<\/strong> Post IT Park-4, NESCO has finalized plans for the next phase of expansion. The company plans to add a new 15,000 sq.mt exhibition hall and IT Park-5 with a leasable area of 2mn sq.ft. NESCO is likely to spend Rs 1.2bn-1.3bn on the exhibition hall during FY20E, while construction activity for IT Park-5 is expected to start from 3QFY20E. <\/p>\n

<\/a><\/strong> <\/a><\/p>\n

Original Article<\/a><\/p>\n

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ET Markets<\/a><\/h5>\n

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Equirus Securities has a buy call on Nesco with a target pri..<\/p>\n","protected":false},"author":1,"featured_media":102213,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[202],"tags":[],"class_list":["post-102212","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"yoast_head":"\nBuy Nesco, target Rs 603: Equirus Securities - Business News Report<\/title>\n<meta name=\"description\" content=\"Equirus Securities has a buy call on Nesco with a target pri..\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.bnreport.com\/en\/buy-nesco-target-rs-603-equirus-securities\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Buy Nesco, target Rs 603: Equirus Securities - 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