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BUY
CMP
1703.00
Target Price
1840.00
SYNOPSIS
Stock Data
Sector
BSE Code
Face Value
52wk. High / Low (Rs.)
Volume (2wk. Avg )
Market Cap ( Rs in mn )
Misc.Commercial Services
505355
10.00
1844.00/742.05
9900
23998.68
Years
FY14A
Net Sales
EBITDA
Net Profit
EPS
P/E
1611.08
1280.31
810.25
57.50
29.62
FY15E
1836.63
1526.88
1003.00
71.17
23.93
FY16E
2038.66
1642.92
1079.91
76.63
22.22
NESCO LTD
PEER GROUPS
Company Name
NESCO Ltd
Delta Corp Ltd
Nirlon Ltd
Centum Electronics Ltd
CMP
(Rs.)
1703.00
92.40
194.30
680.45
MARKET CAP
Rs. in mn.
23998.68
21311.10
17509.90
8523.30
EPS
(Rs.)
57.50
2.53
4.91
23.06
P/E (X)
Ratio
29.62
36.52
39.57
29.51
P/BV(X)
Ratio
5.55
2.61
1.00
8.17
DIVIDEND
(%)
50.00
25.00
7.50
25.00
Months
Sep-14
Sep-13
% Change
Net Sales
466.40
390.58
19.41
PAT
265.61
190.30
39.57
EPS
18.85
13.50
39.57
EBITDA
399.42
313.25
27.51
30th
Sep, 2014.
The companys net profit jumps to Rs. 265.61 million against Rs. 190.30 million in the corresponding quarter
ending of previous year, an increase of 39.57%. Revenue for the quarter rose by 19.41% to Rs. 466.40 million
from Rs. 390.58 million, when compared with the prior year period. Reported earnings per share of the company
stood at Rs.18.85 a share during the quarter, registering 39.57% increased over previous year period. Profit
before interest, depreciation and tax is Rs. 399.42 million as against Rs. 313.25 million in the corresponding
period of the previous year.
Expenditure
Break up of
Expenditure (Rs. in mn)
Q2 FY15
Q2 FY14
%
Change
Cost of Material
Consumed
13.74
17.37
-21%
Employee Benefit
Expenses
19.01
15.90
20%
Depreciation &
Amortization Expense
21.06
27.46
-23%
Other Expenditure
82.49
69.72
18%
Segment Revenue
Company Profile
Established in 1939 April as the New Standard Engineering Co. Ltd. (NSE), the company is known as a pioneer in
the tool manufacturing segment, as it brought into the country, world class processes and designs for the
manufacture of a number of engineering products. Equipment such as forging hammers and presses, blow room
lines and high production cards for the textile industry; and sucker rod pumps for on-shore oil recovery were
some of the main product lines that emerged as market leaders.
In order to reflect on the various new avenues that the company was entering into, the promoters of the New
Standard Engineering Company, decided to change the name to Nesco Limited. The Engineering Group of Nesco
continues to be a leading provider of this equipment to the Indian Railways, numerous Ordnance Factories, and
Forging Plants.
Business Areas
Indabrator
Indabrator is leading manufacturer, supplier and exporter of surface preparation equipments, providing
services to various Indian industries; mainly Foundries, Forging plants, Automotive industries, Indian
railways, Defense organizations, Heavy engineering industries, Ship building industries, Chemical and
petrochemical industries etc.
FY14A
FY15E
FY16E
Share Capital
140.92
140.92
140.92
140.92
3519.27
4246.85
5185.84
6119.29
1) Net worth
3660.19
4387.77
5326.76
6260.21
22.35
21.08
21.92
22.80
232.63
608.28
705.60
790.28
139.70
135.78
142.57
146.85
394.68
765.14
870.10
959.92
Trade Payables
77.49
74.46
58.08
60.40
279.79
289.96
324.76
350.74
59.06
87.84
38.65
42.51
416.34
452.26
421.48
453.65
4471.21
5605.17
6618.34
7673.78
1584.16
1598.13
1678.04
1778.72
Capital work-in-progress
40.31
47.51
55.59
62.81
1624.47
1645.64
1733.62
1841.53
0.33
0.33
0.37
0.41
13.29
23.18
25.50
27.54
1638.09
1669.15
1759.49
1869.48
2584.02
3683.95
4512.21
5382.17
Inventories
48.39
44.01
69.98
89.57
Trade Receivables
96.56
111.81
100.63
112.70
21.36
43.51
57.87
70.02
80.14
47.91
105.40
134.91
2.65
4.83
12.76
14.93
2833.12
3936.02
4858.84
5804.30
4471.21
5605.17
6618.34
7673.78
Non-Current Liabilities:
3) Current Liabilities
Total Liabilities (1+2+3)
ASSETS:
Non-Current Assets:
Fixed Assets
Tangible Assets
4) Non-Current Assets
Current Assets:
Current Investments
5) Current Assets
Total Assets (4+5)
Annual Profit & Loss Statement for the period of 2013 to 2016E
Value(Rs.in.mn)
FY13A
FY14A
FY15E
FY16E
Description
Net Sales
12m
1434.61
12m
1611.08
12m
1836.63
12m
2038.66
Other Income
192.83
203.14
217.36
226.05
Total Income
1627.44
1814.22
2053.99
2264.71
Expenditure
-425.25
-533.91
-527.11
-621.79
Operating Profit
1202.19
1280.31
1526.88
1642.92
-7.17
-1.07
-1.71
-1.40
Gross profit
1195.02
1279.24
1525.17
1641.52
Depreciation
-58.28
-110.26
-88.21
-98.79
1136.74
1168.98
1436.96
1542.73
Tax
-319.88
-358.73
-433.96
-462.82
Net Profit
816.86
810.25
1003.00
1079.91
Equity capital
140.92
140.92
140.92
140.92
Reserves
3455.03
4182.84
5185.84
6119.29
Face value
10.00
10.00
10.00
10.00
EPS
57.97
57.50
71.17
76.63
Interest
Quarterly Profit & Loss Statement for the period of 31st Mar, 2014 to 31st Dec, 2014E
Value(Rs.in.mn)
31-Mar-14
30-Jun-14
30-Sep-14
31-Dec-14E
Description
3m
3m
3m
3m
Net sales
516.27
373.59
466.40
527.03
Other Income
80.34
72.74
45.67
48.41
Total Income
596.61
446.33
512.07
575.44
Expenditure
-202.46
-85.16
-112.65
-151.26
Operating profit
394.15
361.17
399.42
424.18
-0.15
-0.07
-0.75
-0.65
Gross profit
394.00
361.10
398.67
423.54
Depreciation
-28.98
-15.54
-21.06
-22.11
365.02
345.56
377.61
401.43
Tax
-119.73
-95.50
-112.00
-122.84
Net Profit
245.29
250.06
265.61
278.59
Equity capital
140.92
140.92
140.92
140.92
Face value
10.00
10.00
10.00
10.00
EPS
17.41
17.74
18.85
19.77
Interest
Ratio Analysis
Particulars
FY13A
FY14A
FY15E
FY16E
57.97
57.50
71.17
76.63
83.80%
79.47%
83.13%
80.59%
79.24%
72.56%
78.24%
75.67%
56.94%
50.29%
54.61%
52.97%
29.38
29.62
23.93
22.22
ROE (%)
22.72%
18.74%
18.83%
17.25%
ROCE (%)
35.05%
32.16%
30.32%
27.82%
EV/EBITDA (x)
17.80
15.83
12.72
11.29
255.18
306.82
378.00
444.24
6.67
5.55
4.51
3.83
EPS (Rs.)
P/BV
Charts
At the current market price of Rs.1703.00, the stock P/E ratio is at 23.93 x FY15E and 22.22 x FY16E
respectively.
Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs.71.17 and
Rs.76.63 respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 12% and 10% over 2013 to 2016E
respectively.
On the basis of EV/EBITDA, the stock trades at 12.72 x for FY15E and 11.29 x for FY16E.
Price to Book Value of the stock is expected to be at 4.51 x and 3.83 x respectively for FY15E and FY16E.
We recommend BUY in this particular scrip with a target price of Rs.1840.00 for Medium to Long term
investment.
Disclaimer:
This document is prepared by our research analysts and it does not constitute an offer or solicitation for the
purchase or sale of any financial instrument or as an official confirmation of any transaction. The information
contained herein is from publicly available data or other sources believed to be reliable but we do not represent that
it is accurate or complete and it should not be relied on as such. Firstcall Research or any of its affiliates shall not be
in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the
information contained in this report. Firstcall Research and/ or its affiliates and/or employees will not be liable for
the recipients investment decision based on this document.
C.V.S.L.Kameswari
U. Janaki Rao
B. Anil Kumar
M. Vinayak Rao
C. Bhagya Lakshmi
G. Amarender