As long as they are only building the hotels and letting someone else run it I think that should be fine.
Nesco makes for an excellent investment case (other than for the value of huge land bank) is because they lease every asset they build (exhibition space, bldngs in IT park) thus making effective use of their land bank. They should go the same route with Hotels too - lease it out!
However at the moment I believe they should focus on augmenting their Exhibition and IT Park biz before getting into Hotels or anything else for that matter.
Also saw a note today that some shares have been transferred to Engineering Global PTE Ltd. I think this a promoter company only. Any idea about this Mokhtar / Ayush?
NESCO is planning for an extension of the current exhibition area in Goregaon by about 18000 sqmtrs.The plan should be finalized by the end of this month and should be operational by end October.
Lackluster results from NESCO. NP has declined marginally from the previous FY a 81.69 cr (FY13) vs 81.02 cr (FY14) (largely due to doubling of depreciation expenses from 6 crs to 11 crs).
Revenue from the BEC business remains modest (as expected).Other income has gone up marginally.
Indabrator business has suffered a loss this year. Not sure if the prospects of this division will improve with the improvement in the economy (ala Modi effect).
Not much being realized from IT Bldng # 3 as yet.
In any case, Mr. Sumant Patel in his interview had suggested realizing about Rs. 60 cr in revenue from 2014-2015. Even if 50 % of it is realized in 2014-15 it will give a fillip to revenues and earnings with continued 10-15 % growth in the exhibitions business.
Keeping my fingers crossed and hoping to see revenues kick in from the Bldng # 3, as that will really boost the earnings as most of it will go straight to the bottom line!
Look forward to hearing management commentary for the coming year and will try and see if I can attend the AGM on Aug 6, 2014.
As per the report the expansion plan involves an outlay of Rs. 1700 crs. Expansion includes two exhibition cum convention centres and one IT park with four 11 storey buildings.
Also as per the report they plan to use 57 acres (25 lakh sq ft) of land for the above purpose.
Not sure how they plan to go about the expansion - having gone through the AR there is no update on any of this.So bldng # 3 is already there, bldng # 4 next in line. Exhibition sheds to be torn down to build other 2 bldngs and the enhanced exhibition centre?
Additionally noticed cash on the books has increased from 260 crs to 372 crs.
Anyone on the forum planning to attend the AGM on Aug, 20 2014?
strangely the post did not get published - so writing again
NESCOâs Q1 results have been outstanding. This is a fairly linear business so if topline has jumped 50% in Q1 in which the firest 45 days were a wash-out pre-election since everyone was waiting and watching, shouldânt it be truly acche din for the rest of the year ?
At this price, it looks like a 9 % FCF yield ex-cash and I cannot see too much downside although I cannot figure out how much the upside could be given the run-up
Any VP-ers in mumbai with insights about if the building has been occupied fully ?
Came across Nescoâs expansion plans while reading the paper on Saturday. Here is the link to the article -
As per the report the expansion plan involves an outlay of Rs. 1700 crs. Expansion includes two exhibition cum convention centres and one IT park with four 11 storey buildings.
Also as per the report they plan to use 57 acres (25 lakh sq ft) of land for the above purpose.
Not sure how they plan to go about the expansion - having gone through the AR there is no update on any of this.So bldng # 3 is already there, bldng # 4 next in line. Exhibition sheds to be torn down to build other 2 bldngs and the enhanced exhibition centre?
Additionally noticed cash on the books has increased from 260 crs to 372 crs.
Anyone on the forum planning to attend the AGM on Aug, 20 2014?
)------To-date, HSBC (~0.2 mn sq.ft.), KPMG (~0.06 mn sq.ft.), Aegon-Religare, MSCI Services, Erickson have occupied the premises. Management maintained optimism that they are working with few MNCâs and hope to close deals sooner. Current negotiations with potential clients are going-on at ~Rs95 sq.ft./per month (excluding CAM rates).
Update from India Nivesh report post 1QFY15
)-----Increase intop-line was driven by 68% increase in Exhibition & IT Building segment revenues.Of the total 0.42 mn sq.ft. of leasable area (for IT Building III), currently ~0.35 mn sq.ft. of leasable area is generating revenues. Notably, 1 of customers (with ~0.06 mn sq.ft) is on rent-free period till Dec-14, with lower lease rate of ~Rs 20 sq.ft/ p.m. Otherwise reported numbers would been higher. Also, Exhibition business reported 10% y/y increase in revenues.
)-----Owing to state government elections (in Q4CY14), management expects delays in getting FSI approved for their Exhibitions business expansion.
)-----Owing to state government elections (in Q4CY14), management expects delays in getting FSI approved for their Exhibitions business expansion.
)----- IT Building IV is awaiting to get last leg of clearance by Oct-14, after which they expect to start excavation works. IT Building IV is likely to have built-up space of ~1.4 mn sq.ft. and leasable area of ~1.05 mn sq.ft. Construction costs for the projects are likely to be at ~Rs 2,000 sq.ft. (indicating total project cost to be at ~Rs 2.8-3.0 bn). Management expects IT Building IV to be ready by FY18E.
Their EPS estimates are Rs82 for FY16E and Rs105 for FY16E
Disclaimer: Shareholder since April 2012 and infact have increased my exposure in Sep2014
All of the above seems very positive for nesco going forward.
However I do not understand why the mangement doesnt cover these points in the AR. These expansion plans, the occupancy, the IT building details none are covered in the 2013-14 AR. How will the minority shareholder know?
Old news. I was expecting Daljeet kohli to clarify this but no detailed report came. When the Q1 result came, Daljeet knew this but didnât seem too concerned in preliminary review of q1 and struck to that 1600 odd tgt. My 2 cents - as long as they donât added debt it is ok. But because of makeover lead time, there will be other dents too. Hopefully someone here knows more
These are my takeaways from the AGM of the company held earlier this year.
Please note: I have no further updates on the company. will wait for the quarterly results instead.
1). Development of Nescoâs land bank in suburban Goregaon seems to be on track.
2). IT Tower 3 has several marquee clients including HSBC which has rented
three storeys of the building. There are others like Price WaterHouse,
KPMG, etc. The AGM was held in the food court. In contrast, last
yearâs AGM was held in one of the empty floors. One could see a buzz
in the compound since the number of people in the complex has gone up.
3). Facilities like the food court, gym and creche for children of
employees in the building are all revenue earners for NESCO which has
tied up with decent suppliers. For instance, Pizza Hut is vending
pizzas in the food court.
Though the management is Gujarati Patels they have not restricted food
vendors from selling non-vegetarian items considering that companies
here are big international names.
4). Construction work on IT Tower 4 in the complex will begin in the third
quarter of this year and will be complete by end-2016. It will be
bigger than other buildings and be spread over 14 lakh sq ft. Larsen and Toubro is the contractor. (PLEASE NOTE: CONSTRUCTION OF TOWER 3 WAS DELAYED BY MORE THAN A YEAR. THOUGH MANAGEMENT PROMISES CONSTRUCTION IN TWO YEARS, IT USUALLY TAKES THREE TO COMPLETE).
5). The management reports that the Bombay Exhibition Centre is getting a
major makeover. The sheds housing the exhibition centre will make way
for big buildings in due course. Permission for this is still coming.
Sumant Patel said he would be able to give more information in the
next AGM.
If permissions for the exhibition centres come in the next few months,
work on IT Tower 4 will be speeded up. Management has indicated that
they would not want to take on unnecessary debt to develop the
exhibition centre. It will comprise of four buildings of 11 storeys
each and house offices apart from exhibition centres and convention
halls.
6). It is quite possible that the exhibition centre will also be developed
in stages. Once full developed the exhibition centre will have a built-up area of
83 lakh sq ft.
7). IT Park 3 had 70 per cent occupancy at the time of AGM. Management was confident of full occupancy by end of current FY.
Despite the poor real estate market, management has managed to improve lease rental realisation to around Rs 90/sq feet compared to Rs 75/80 two years ago.
Thanks a ton for this update Shiv. It gives a good perspective on where the company is headed. Great job!
Some related neighborhood news. Singapore based sovereign wealth fund GIC is looking to acquire 62.6% stake in Nirlon. The deal value is touted to be around 1250 crs thus valuing the company with 23 acres of prime real estate land (with most of the land holding utilized) at close to 2000 crs. Applying some crude logic to this the value of land + buildings held by Nesco should be in the range of 5000-6000 crores (market cap of the company is close to only 2000 crores).
The above news article also indicates rent yields will increase by about 10-15 % on a pan India basis (in the next few months). Any additional revenues without any additional costs will add directly to the companyâs bottom line. All in all FY 16 for the company looks interesting with an expected full year of rental revenues to be realized. Any increase in rates will be the icing on the cake.
Thanks a ton for this update Shiv. It gives a good perspective on where the company is headed. Great job!
Some related neighborhood news. Singapore based sovereign wealth fund GIC is looking to acquire 62.6% stake in Nirlon. The deal value is touted to be around 1250 crs thus valuing the company with 23 acres of prime real estate land (with most of the land holding utilized) at close to 2000 crs. Applying some crude logic to this the value of land + buildings held by Nesco should be in the range of 5000-6000 crores (market cap of the company is close to only 2000 crores).
The above news article also indicates rent yields will increase by about 10-15 % on a pan India basis (in the next few months). Any additional revenues without any additional costs will add directly to the companyâs bottom line. All in all FY 16 for the company looks interesting with an expected full year of rental revenues to be realized. Any increase in rates will be the icing on the cake.
Comparing Nirlon with Nesco wonât be apt because the former does not have an Exhibition business. So Nirlon is basically a real estate play, while Nesco also has a deep moat in the form of the Exhibition business. A multi-storeyed Exhibition centre will be a cash cow with negative working capital since exhibitors have to pay in advance.
Just learned today that an exhibition cum convention centre being developed by RIL is coming up in BKC (I was totally unaware of this before today). The convention centre is scheduled to be up and running in the next couple of years (2017 as per the report).
Will this put an end to NESCOâs monoply in the exhibitions business in Mumbai? Honestly, I was very disappointed to read about the new convention centre
Looks like Oshiwara station will be up and running soon (June 2015 as per the below report). This would further lead to better connectivity in and around NESCO.
My office is in BKC. I have seen this plot. Incidentally the builder seems to be L&T and not Samsung thoughyou should doublecheck.
Seeing the progress on the BKC site 2017 seems like a distant dream. However, it is something I worry about. But yes 2020 might be sometime when you worry about this.
