NESCO LTD - Quantamental Equity Research Report

	Quantamental Equity Research on NESCO LTD | Release: 29 Nov 2018 22:45:45 UTC+05:30 | Reporting Currency: INR | Trading Currency: INR | Exchange:NSE/BSE NSE CODE:NESCO and BSE CODE:505355
	Last Close:	INR 438.4
	Fair Value:	INR 450.55
	Est. Price by Mar 19:	INR 616.3
	Market Capitalization (INR Crs):	3088.96
	Industry:	Misc.Commercial Services
	Rating:	STRONG BUY
	Upside:	41%
	Company Profile
	NESCO Limited is an India-based company that manufactures a number of engineering products. The Companys product line of equipment such as forging hammers and presses, blowroom lines and high production cards for the textile industry; and sucker rod pumps for on-shore oil recovery.
	Growth Per Share
	Particulars	1-Year	3-Year	5-Year
	Revenue %	-1%	74%	164%
	EBIT %	-3%	50%	110%
	Earnings %	4%	58%	116%
	Book Value %	19%	89%	176%
	Stock Total Return %	13%	72%	263%
	Share holding pattern
	Particulars	%age
	(A) Promoter & Promoter Group	68.18
	(B) FII/FPI	2.29
	(C) DII/Insurance Companies	5.52
	(D) Public holding < 2 lakhs of cap.	13.97
	(E) Others	10.04
	Grand Total	100.00
	Fundamentals (Historical and Estimated)
	Particulars	Mar-10	Mar-11	Mar-12	Mar-13	Mar-14	Mar-15	Mar-16	Mar-17	Mar-18	Mar-19 E	Mar-20 E	Mar-21 E	Mar-22 E	Mar-23 E
	Price	111	101	132	155	172	327	305	499	563	616	711	796	863	910
	Return on Equity	35%	31%	24%	22%	18%	21%	21%	20%	18%	14%	14%	13%	13%	12%
	Price to Earning	8.6	10.3	13.8	13.4	14.9	20.6	14.9	20.8	22.4	27.8	27.8	27.8	27.8	27.8
	EVTI	2.8	3.8	5.1	5.1	4.6	8.6	5.8	8.7	10.2	9.5	9.5	9.4	9.1	8.9
	EVTIFM	8.6	10.3	13.8	13.4	14.9	20.6	14.9	20.8	22.4	27.8	27.8	27.8	27.8	27.8
	Price to Book Value	3.0	3.2	3.3	3.0	2.8	4.3	3.2	4.2	3.9	3.8	3.8	3.7	3.6	3.4
	Debt to Equity	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
	Dividend Yield	0%	0%	0%	0%	1%	0%	1%	0%	0%	0%	0%	0%	0%	0%
	Cash Flow to Firm	-108%	-317%	-322%	-183%	-116%	90%	-856%	45%	2%	3%	4%	4%	6%	7%
	Detailed Estimates
	Title	Mar-18	Mar-19 E	Mar-20 E	Mar-21 E	Mar-22 E	Mar-23 E
	Sales	303.64	361.30	417.28	467.34	507.05	532.40
	EBITDA	251.67	249.48	288.13	322.69	350.11	367.62
	EBIT	240.64	236.35	272.80	305.34	331.06	349.00
	PBT	235.09	236.35	272.80	305.34	331.06	349.00
	NPAT	176.69	156.01	180.08	201.55	218.54	230.37
	Price to Earning	22.44	27.83	27.83	27.83	27.83	27.83
	Price to Book Value	3.93	3.77	3.81	3.75	3.59	3.36
	Debt to Equity	-	-	-	-	-	-
	Return on Equity	0.18	0.14	0.14	0.13	0.13	0.12
	Enterprise Value to Total Income (EVTI)	10.20	9.54	9.53	9.44	9.14	8.87
	Enterprise Value to Total Income to Firm Margin(EVTIFM)	23.94	31.39	31.38	31.10	30.13	29.12
	Price or Est. Share Prices	562.76	616.30	711.40	796.25	863.35	910.15
	DISCOUNTED CASH FLOW
	Title	Mar-19 E	Mar-20 E	Mar-21 E	Mar-22 E	Mar-23 E
	PBT	236.35	272.80	305.34	331.06	349.00
	Interest	-	-	-	-	-
	Depreciation	13.12	15.32	17.35	19.05	18.62
	Cash Flow Before Tax	249.48	288.13	322.69	350.11	367.62
	Tax Rate	33.99	33.99	33.99	33.99	33.99
	Cash Flow After Tax	164.68	190.19	213.01	231.11	242.66
	Terminal Cash Flow	-				4,300.03
	Total Cash Flow	164.68	190.19	213.01	231.11	4,542.69
Present Value of Cash Flow					3,174.33
Debt					-
Value of Equity					3,174.33
Fair Value Per Share					450.55
Equity					3,089
Debt					0
Beta	Take from Reuters				0.48
Risk Free Rate	Prevailing Yield in India				8%
Market Risk Premium	Assuming 8.82% premium for Equity Investments				9%
Interest Paid					6
Tax Benefit					1
Interest Net of Tax					4
Debt					0
Cost of Debt					0%
Cost of Equity					12%
Debt Weight					0%
Equity Weight					100%
WACC					12%
Cash Flow of Mar-23 E					242.66
Growth					6.0%
Present Value of Terminal Cashflow					4,300.03
Peer Comparision
#	Name	CMP Rs.	Mar Cap Rs.Cr.	B.V. Rs.	Annualized ROE %	ROCE %	Latest EVTI	Latest EVTIFM	CMP / BV	P/E	Debt / Eq	Div Yld %	Growth Rate R %	SGR %	Ann Total Income	PQEIOI	QoQ Sales %	Qtr Sales Var %	QoQ Profits %	Qtr Profit Var %	Graham's Number Rs.
1	Gujarat Gas	635.95	8,756	140.39	10.69	16.55	1.38	47.16	4.53	30.36	1.26	0.63	8.67	7.53	7,933	60.89	393	11.29	41.18	-66.17	-32.76
2	Kaveri Seed Co.	522.80	3,300	163.75	5.39	21.02	7.53	-512.29	3.19	15.75	-	0.60	4.89	39.39	353	55.09	-2,947	-87.08	8.03	-94.33	-42.90
3	Venky's (India)	2,332.05	3,285	557.20	3.34	36.17	1.34	143.54	4.19	16.66	0.49	0.34	3.15	3.77	2,604	56.11	4,563	-14.55	9.92	-92.29	-79.81
4	NESCO	438.40	3,089	152.54	24.65	25.97	6.14	13.58	2.87	17.93	-	0.52	22.39	44.21	421	68.18	70	32.57	21.17	35.77	1.90
5	Security & Intel	812.10	5,954	155.51	21.16	19.51	0.87	25.70	5.22	35.87	0.54	0.43	17.81	14.69	6,781	75.36	154	4.89	15.77	10.89	-25.68
6	Century Ply.	173.35	3,851	40.25	22.27	17.08	1.89	21.85	4.31	23.26	0.65	0.58	19.10	19.41	2,262	72.27	105	5.06	18.94	-16.64	-5.78