Some interesting points
Disc: Invested
Mridul TCS is developing office spaces in Thane as it is low cost and Thane is going to become an Hub for TCS in Mumbai . They already have Yantra Park and Neptune in Thane and this year or next a lot of operations are going to move into Thane region . I dont have any specific idea whether the NESCO premises would be shifted and if yes where .
Building One where TCS is operating from is going to be redeveloped. The
new building will have an area larger than Building 4 which is under
completion.
Whatâs the source of this info?
Bldg 4 is 17 lac Sft whereas Bldgs 1 & 2, combined, are less than 4 Lac Sft. Even if FSI has doubled, then the max theyâll be able to construct after razing down Bldgs 1 & 2 is 8 Lac Sft. So, I am not sure what I am missing in this calculationâŚ
Leasable area of building 4 is 12 lac Sq. Ft and the construction is going on in full swing. Expected to be completed by next financial year.
The management will buy TDR to redevelop Buildings 1 and 2. In my AGM notes
I have provided details on how much extra development rights are available
as per the management. This would increase now that the company is giving
up some land for the metro. Clarity on this will be available in the next
AGM.
Thanks for the info.
The additional FSI released is for the entire land bank and is only limited
to Building 1 & 2. How they use it across various developments is a
strategic call by the management, ie across IT Park, Exhibition Center, etc
At the last AGM management indicated that they have availed of higher FSI of 2 instead of 1 for the IT/ITES building and FSI of 3 for exhibition centres. They wonât be able to load further TDR. But since a small portion of land is being acquired for the metro rail there could be higher benefits like FSI or TDR since this is the norm in Mumbai.
in this case management specifically said additional TDR wonât be applicable since FSI has been increased for IT/ITES buildings and exhibition centres. But Sumant Patel said IT Building 5 will be bigger than previous buildings even as IT buildings 1 and 2 are redeveloped.
The only problem I found with Nesco is that the management is very silent and may not be very transparent to the minority shareholders. So it will be very difficult to gauge the earning estimation. Honestly speaking thanks to @vivek_mashrani I can at least have some purview of the earning of this asset player which looks really good. But my question is why the management is not making any con call or investor presentation? at least I havenât been able to find any such.
I see this as advantage for retail investors. E-mail or speak with IR, they generally respond. As such business doesnât have many moving parts to get worried about.
Company has now started having Investor Meets with Mutual Funds/Institutional Investors:
Disc: Invested
So thatâs the current status of IT Building 4. While it appears to be a couple of floors high, there are about 2-3 levels of basement that are not visible in the photo.
However what is particularly interesting is that while work was progressing at a rapid clip until the Good Friday weekend, since that weekend, construction has virtually stopped. There is not one person on the construction site and the two cranes are lying unused.
It may be that the workers from up/Bihar have gone to native place.
my office is located close to the nesco site. i visit the site once a month. work is definitely on in full swing. a large part of the effort goes into the basement work and i remember seeing the construction since then. Feel confident about the building and the stock potential in the near future.
Does anyone have a clue about what has happened to the dhirubhai convention centre in BKC? Any updates?
disclosure: invested
So now finally co has become market savy and going for stock split.
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
facility.
Nescoâs 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 donât take my observations at face value.
disclosure: holding in core portfolio and buying on dips, so my views may be considered biased.
Shiv Kumar
