Dividend has increased. Stock to be split from Rs 10 to Rs 2 face value. Rs 484 cr cash in hand to fund construction of IT Building 4 and redevelopment of Exhibition Centre.
Tepid results as expected. With IT buildings 1,2 and 3 fully occupied
investors must expect growth in topline and bottomline only after the
fourth building is completed.
Management had earlier projected completion of IT building 4 by end-2017. In the past, IT Building 3 has seen delay by 12-15 months and I expect the case to be the same this time as well.
Assuming that IT Building 4 will be completed by end-2018, we should be seeing a significant bump up of revenues only by March 2019. So flattish revenues and profits for the next eight quarters.
Growth in the exhibition business is directly dependent on the economic growth and we have seen growth slow down in Q4 mostly because of demonetisation. Q3 saw decent performance but exhibitors would have booked and paid in advance. Bookings are done three to six months in advance so some slowdown can be expected in the June quarter as well.
We must also keep a watch on how the re-development of the exhibition centre progresses. Revenues from exhibitions could take a hit and stay low for at least three years if some of the halls are pulled down for big
Nesco's stock has run up quite a bit and I expect a combination of time-wise and price-wise correction over the next two years. But I deserve to be wrong in this so please don't take my observations at face value.
disclosure: holding in core portfolio and buying on dips, so my views may be considered biased.