Buy Nesco: target of Rs 745: ICICI Direct

ICICI Direct is bullish on Nesco recommended buy rating on the stock with a target price of Rs 745 in its research report dated February 19, 2021.

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ICICI Direct research report on Nesco

Nesco’s 9MFY21 (and Q3FY21) performance was impacted by virtual closure of Bombay Exhibition Centre (BEC), which was used for Covid Care by BMC and subsequent minimal take-off in hospitality (foods & own events business). For Q3FY21, revenues declined 28.3% YoY at Rs 82.5 crore, largely impacted by 91.3% decline in BEC revenues and ~53.2% decline in hospitality segment. EBITDA at Rs 52.9 crore was down 31.6% YoY. PAT at Rs 48.9 crore for Q3FY21 was down 29.2% YoY.

Outlook

We like Nesco, given the prudent management pedigree, steady & planned expansion across verticals funded largely through internal accruals and niche profitable business model including foods/own events etc. Post a washout FY21 for exhibition, we expect gradual recovery from H1FY22 as pandemic effect fades completely. The IT park business is also likely to get a boost as occupancies improve in FY22. We maintain BUY rating on the stock with an SoTP target price of Rs 745/share (Rs 650, earlier).

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