Nitesh Estates, founded by Nitesh Shetty in 2004, is into property development in South India, predominantly in Bangalore. Nitesh Estates was listed in 2010 and had a listing market cap of 500crs.
Nitesh Shetty, a dynamic and self made enterprenuer, is in his 40s and quite a visionary in his field. He started hoarding business and convinced one of the land owners to develop their property and thus began his career in property development. The company has many marquee projects to its credit like the Ritz Carlton in Bangalore, Nitesh Hub Mall in Pune, and many grade A office buildings in the CBD of Bangalore. There are only a handful of Grade A property developers in Bangalore and Nitesh is one of them. His usp being his designs and fancy facades, truly redefining bangalore’s skyline. Nitesh Shetty has got KPF (one of the most prestigious architects of New York) to design the Nitesh Park Avenue project in Bangalore. This just shows that he is extremely passionate and smart about his development.
But not so smart with his finances, as the company is finding it extremely difficult to survive, given its current situation with its mounting debt (around 900 cr). So much that the company has not reported profits for the past 3 years and its reserves in the balance sheet is also eroded.
The company has completed 19 million sft and currently has over 11 million sft under development (both residential and commercial combined). The company also owns a stake in the Ritz Carlton hotel in Bangalore (around 26%) and the Nitesh Hub Mall in Pune (this Mall is recently sold in order to reduce their debt).
Now the trigger. There was a news article in Jan 2018 that Chinese real estate firm Fosun is looking to pick up 50% stake in Nitesh Estates for 800 cr! While the valuation might be slightly steep, this is very possible considering anyone who wants to take controlling stake in a marquee company and dive deep into Bangalore’s real estate. As stated, there are only a hand few Grade A developers in Bangalore and getting a controlling stake in any other firm is not possible. This might be the reason for Fosun.
What if the deal does not take place? Well that’s a huge risk and definitely a possibility. But Nitesh Shetty has increased stake in the company this quarter. Is this an indication? Since he is privy to inside information!