Nesco

[rishikeshs]

@amangoklani

With IT building 4 completed, the company is looking to undertake two new projects. New Hall at BEC (2,20,000 sq. ft) and IT Building number 2 (24,00,000 sq. ft). They are also going to demolish the existing IT Building number 2 as it is quite old which will be replaced with the new IT building number 2. Expected cost to build all of this would be Rs. 1700 - 2000 crores. All of this will be funded through internal accruals and no debt will be taken. In the next few months, the drawings and plans will be charted out for the IT Building Number 2. The building will be completed in 4-5 years. Development of it will start in 2020. Will be developed in two phases. First phase two years and the next phase in remaining years.

firstly thanks for the summary!

ignoring the exhibition space increment as its about 10 pc of the total.

say 1500-1700crs for 2.4m sq feet for it building. and i guess if building 4 expected to get 200crs when fully rented out. building 2 would be at about 300crs on the current prices. that is a 20pc expected yield. this will be higher as the rents should increase between now and when the building is ready. but i guess it will still below the 30pc expected yield on building 4. building 1, if i remember correctly, had a cost of 200 crs and the first year yield was close to 50pc.

20+pc is still very good. but there seems to be a 50->30->20+ downward trend in expected first year yield. this when land is essentially free for nesco. i wonder how the rest of the developers survive.