East India Securitie's report on Nesco
Bombay Exhibition Centre (BEC) was handed over to Municipal Corporation of Greater Mumbai (MCGM) to be converted into a COVID care centre. With the volatile situation in cases being reported in Mumbai, the BEC will remain with the MCGM for some more time, post the decline in cases the BEC is expected to be handed back to the company. The company is hopeful that exhibitions should start in a light format from Q4FY21. The revenue in FY22 should be similar to FY20 levels for the exhibition business. The planned expansion of BEC will not be delayed and should start in the next two months once permissions are received. The expansion will be a multipurpose hall for both social and corporate gatherings. The company’s own events division has been dialled back for now, although the company has big plans for the same going ahead. Jio Convention centre is not seen as a threat by the company, as it craters to a different segment of exhibiters. Currently no rental hikes are on the cards for BEC till FY22.
We arrive at a target price of Rs631 through DCF method implying an 18 PE multiple to FY22E earnings. We have Accumulate rating on the stock.
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