Are you sure about the 24 lakh sq ft being carpet area and not built-up area? The chairman’s speech does not specifically qualify it as carpet or built-up. What is your source of information?
I asked Krishna Patel after the AGM.
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24L sq ft will be the build up area per my notes from AGM and same is matching with what was described in AGM of FY17-18 as well.
Hey, just wanted to know how much space is still available for development. Looking at the satellite image, I somehow see it mostly filled up! (If I have traced the area correctly)
@vivek_mashrani In your model, you have assumed the new BEC area to be 20 Lakh sq ft. May you please provide the source which cites this? Is the construction going to be multi-storeyed?
Because 20 Lakh sq ft on ground comes to roughly 45 acres which is not feasible when the overall is 60.
For the long-term holders, may you help with the following questions?
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Why is the management confident on building more exhibition space? When already with the current space they are having to come up with new initiatives to better the occupancy? Why not focus more on the IT building business?
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If the 450 room hotel is constructed, let’s say a per day tariff of Rs 1500 with 75% occupancy will fetch you revenues less than 20 Cr per year, maybe some more with additional service offerings.
For an optimal use of FSI, shouldn’t high rise IT buildings be the focus to maximize it, especially when land is so expensive in Mumbai?
what you see in the satellite image are the old sheds from the time the company was known as the New Engineering Company. The new buildings are coming up in place of the sheds.
proposals to construct hotels, and multi-storeyed exhibition space, etc are in the really long-term and may change. in the next few years, the management will be working on building its new IT building. It may happen in one or two phases.
Management has indicated that own events will account for fifty per cent of the company’s revenues from the events/exhibitions business in the next few years. Margins are obviously very high in this.
hotel tariffs in Mumbai are quite high. Star hotel rates are about Rs 4500 to 5000 per night or even more.
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Thanks for your input.
Just another doubt,
This is from AR 2011; what exactly is this the realty division income (10 cr)? Is it for the residential land given on rent to Raheja? (couldn’t find any source)
- Also, from 2012 AR onward, I do not see its mention. Did it get clubbed into something else?
- AR 2011 IT Park revenue is 41 Cr. AR 2012 mentions IT Park revenue as 33 Cr for 2011. Any accounting change?
my knowledge of accounting is poor. need help from others.
Does anyone know the latest state of building 4? The last time i went past the building it seemed like there were some finishing work pending but there was no activity that I could notice. Did the building get it’s oc?
Also, it seems like wework is one of the tenants in building 4. Does anyone know the number of sq feet they might have leased? This is in context of the issues surrounding weworks.
In Aug , Management said building is done & certification was received. Currently, 4 big deals have been done for building 4 and that includes Weworks.
Joindre Capital have recently done a very detailed research report on Nesco. Information you seek is here :
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thanks!
the note doesnt clarify re the size taken-up by weworks. if anyone knows that would be great.
i was just looking at nesco in a bit more detail from a 3-5 year perspective.
the last time (IT building 3) it took about 4-5 years for the potential to be reached (fy13: 27 crs -> fy17: 141 crs). and in fy13 you’d see reports claiming 60 pc of building 3 was leased. given 136 crs in fy19 + 200 crs of building 4. are there reasons to believe the potential will be reached sooner than 4-5 years this time? (esp given the size of building 4 is 2x the size of building 3)?
given reliance exhibition center is very likely to be completed over the next 4-5 years how are people thinking about the hit? is it more likely a 20pc hit or is it more likely to be a 40-50pc hit? bec did over 50pc of revs in fy19. so this might not be insignificant.
https://in.news.yahoo.com/nesco-leases-6-lakh-sq-111146324.html
according to this report 6 lakh sq ft has been leased.
management gives tenants six months time to do the fit out. For this rent is not charged. it is the tenants’ responsibility to get the municipal permissions etc. by mid 2020 entire building could be leased out and full revenues would be recognized in three to four quarters.
disclosure: holding
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NESCO Q2 RESULTS
Good uptick from IT park revenues, which was on expected lines. Increase in BEC revenues is quite encouraging sign given we are in slowdown.
Also, observe the tax rate kicker, which market probably completely ignored to price-in after the govt announcement.
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Any reason why the food division has barely grown?
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Based on my understanding, it is running at almost 100% utilization levels, so unless they add meals capacity, it is unlikely to grow substantially.
To get a deeper sense on this, you might want to see the jump in food division numbers when it earlier just started and then you can look at my model posted few years back to validate. It will broadly sync. Thanks.
Broadly 15-20% CAGR for next 2-3 years. Thanks.
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The article is average and is mostly cut copy paste. They have copied the language of the company. Besides I will be cautious in believing anything Joindre Capital has to endorse, considering this http://www.moneycontrol.com/news/business/stocks/buy-arcotech-target-of-rs-73-joindre-capital-2476203.html
Nothing against Nesco though as I dont know much about it.
Just trying to know.
Are we sure regarding the tax cut benefit?
If we look at the aggregate tax rate for the past 2 years wrt PBT, it comes to around 25.6%.
It is not clear to me whether ‘income not considered for tax purposes’ benefit would be there if they adopt a rate cut.
I maybe wrong in my understanding.
I just did quick math - tax paid divided by PBT.
I am not sure about this specific as it will come only in detailed annual report next year. Worth sending email to company to clarify.