sorry , I was not clear.
EV\EBITDA because with maintenance as main expense , negligible interest cost I thought it would be good scale.
yes It would not become REIT technically but for investor it may become like REIT=> income going into dividend or buyback . Of course first few years ,max income would go into building new buildings.I am talking about the time when their exhibition becomes minuscule segment and rental income becomes 3x from here.

My two cents on the recent discussion here about NESCO exhibition business going zero and turning into (about) a REIT:

  1. NESCO, even currently, have much much higher exhibition space than the new JIO World Centre. With the slated expansion, NESCO exhibition space would be more than 6 times of JWC.

  2. JWC has huge (largest in India till date) Convention Centre. However, convention and exhibition are two very different genres of the larger MICE industry. They appear similar, but have very different clients. IMHO, convention is a lower margin business (20-30%), whereas exhibition commands margins as high as 70%. Anyways NESCO was never in conventions, so no effect whatsoever.

  3. Location of NESCO is quite far away from JWC and hence cater to quite different audience. Moreover, in the greater Mumbai region, NESCO is more centralised than JWC.

  4. In developed countries like Germany, China, Canada, US, etc. (in that order), large cities have more than 4-5 large expo centres. So India’s financial capital can easily have 3-4 centres.

For me, the main attraction of NESCO is it’s niche exhibition venue business, which is high margin and a BIG moat.

Disclosure: invested and an exhibition professional


Maybe I wasn’t clear in my point earlier - exhibition centre biz or not - For NESCO to become an REIT, lot of restructuring will have to be done with the company to be divided into one holding land asset and another operating its buildings and biz. It won’t be worth the effort.

Some of the listed REITs hold assets other than commercial office space so an exhibition centre biz might be accommodated, but the whole point is - why?

The only concern is - which I mentioned a few posts back as well also was - the onus now is on mgmt to ensure that IRRs from NESCO projects is greater than its listed REIT peers. Otherwise,why will a rational investor buy this and not the other listed REIT stocks.

MOAT - There are 2 aspects to MOAT - Its breadth and its depth. Yes, NESCO has a wide moat due to its location advantage, despite JWC coming up.However, the moat, I believe is not deep enough as its prone to single location risk. Macro events like terrorist attacks,lockdowns and now emergence of online\virtual events do pose a risk to its exhibition business.

Disclosure :- Same as above


Few interesting observations on NESCO

  1. Entire exhibition business contributing ~150 Cr revenue and ~100 Cr profit (FY20) is decimated since Covid outbreak (FY21 & FY22)
  2. However overall profits decreased by only ~ 50 Cr (from ~250 Cr in FY20 to ~200 Cr in FY21 & FY22)
  3. Increase in profitibility (~ 50 Cr) from IT Parks business (due to commencement of new building and higher leasing) compensated overall decrease in profitibility (~100 Cr).
  4. Assuming exhibition business will get normal in couple of years, the profitibility will see a jump of ~ 100 Cr going forward.

So overall profitibility can be 300 Cr on steady state basis, along with company holding 800 Cr cash that it plans to deploy by building 2.5 million sq ft leasable space and enhancing exhibition center from 5 lakh sq ft to 10 lakh sqft.

Growth is visible ahead but execution needs to be monitered.

1)Time will tell if office leasing business is impaired with WFH culture being accepted by multi-nationals.
2) Single location dependency augurs risks.

Overall Profitibility

Segmental decrease in revenues and profitibility


AR 2022 notes

  • 80% of Tower 03 (same as FY21) and 92% of Tower 04 (vs 75% in FY21) are occupied
  • Had 12 guest exhibitions in BEC (from Nov 2021 to March 2022) with 21 planned in FY23. Exhibitions organized were Acetech 2021, Tech textile India 2021, International Health, Sports 2021
  • Bombay Exhibition business includes 73% of exhibition area within Western and Northern region - Western (38%), Northern (35%), Southern (24%), Central (2%), Eastern (1%) and it primarily focus on B2B events
  • Company’s liquid resources (fixed maturity plans, mutual funds, cash and bank balances) increased by 4.46% to 855.79 cr. from 819.23 cr.
  • Sumant J. Patel passed away on 17th November 2021
  • Expansion plans
    o IT Park: Completed designing & finalization of plans for new Tower 02 which will be located in place of legacy IT building 02 and adjoining areas. The designs are made by Singapore Based Architects – Aedas and the total development size will be about 4.6 million sq. ft. that includes office space, hotel, car parking and other amenities. Estimated cost is 2000 cr. (increased from 1800 cr. estimated in FY21) with outflow spread over 5-years
    o IT Park Division is planning to complete the F&B and Retail areas in Tower 04 which include new Restaurants, Food Court, Gym, Convenience Store, Salon and a Coffee Shop. The expected cost is approximately 50 cr.
    o Completed conceptualization for landscaping of Tower 03 at cost of 4 cr. which shall be undertaken in FY23
    o For FY23, Nesco Foods is planning to increase its revenue stream by foraying into outdoor catering and B2B contracts outside the Nesco Center and operating two brands in food court named as ‘Indic’ & ‘Daily Dely’
  • Indabrator division: Abrasive plant manufacturing capacity is 6000 MT/annum and can generate revenue of 25 cr. on full capacity basis, two plants (Karamsad, Vishnoli)
  • CSR spends: 4.97 cr.
  • Auditor remuneration: 31.27 lakhs (vs 21.76 lakhs in FY21)
  • Employees: 118 (excluding KMP), managerial remuneration reduced by (-34.75%), for other employees remuneration increased by 2.74%
  • Number of shareholders: 36’630 (vs 39’865 in FY21), price (low): 463.5, price (high): 687.15

Here are the relevant business metrics since FY13.

FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
Total Revenues 162.74 181.42 223.07 297.08 357.20 358.00 392.60 474.28 355.70 382.41
IT Park 27.86 47.83 90.67 124.40 141.91 145.40 137.00 214.17 246.06 264.15
Exhibition centre 90.52 94.89 85.86 111.83 132.77 129.70 156.00 158.60 5.95 16.18
Hospitality services 5.60 20.40 34.10 35.68 13.00 11.35
Indabrator 25.08 18.39 17.91 27.93 33.89 26.40 32.50 23.27 26.09 45.71
Investments 19.28 20.31 28.62 32.90 42.98 36.10 33.00 42.55 64.60 45.01
KMP remuneration (cr.) 3.60 3.75 5.11 6.06 7.06 7.58 8.02 21.49 13.54 9.06
Audit fees (lakhs) 7.85 9.55 11.01 11.50 15.60 19.85 21.69 21.68 21.76 31.27
Employees 121.00 135.00 166.00 131.00 159.00 155.00 130.00 118.00
KMP remuneration to sales 2.21% 2.07% 2.29% 2.04% 1.98% 2.12% 2.04% 4.53% 3.81% 2.37%

Whats good to see is that KMP remuneration has come down significantly since FY20.

Disclosure: Invested (position size here, no transactions in last-30 days)


I think managerial remuneration was a concern earlier. 34.75% decrement in salary is too much of a pay cut. why it was reduced so much in a year ?

Somebody correct me if I’m wrong. But in 2020, the Managerial Remuneration was almost doubled and the additional funds were used by the Promoters to purchase Stock in the company.

The Salary as a % of Profits has remained similar throughout the recent years, but the Promoters essentially gifted themselves additional Stock in the company in 2020.


Correct me if I am wrong but the promoter of Nesco is Patel family and also related to or same Patel family who are promoters of Gmm pfaudler. And we all know the management shenanigans of Gmm…

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Any idea why profitability for the IT park is down QoQ?

Any idea why prices are up 20% in last two days.

May be this


NESCO.pdf (555.8 KB)

NESCO has been one of the worst hit stocks in the pandemic. It faced a triple whammy:

  1. No exhibitions due to the pandemic resulting in loss of income from BEC as well as NESCO Foods which supplies food & beverages to the exhibitions
  2. Poor lease realisations due to the “work from home” operations of most IT and Finance companies
  3. Exhibition center being taken over by Municipal Corporation for Jumbo COVID Centre, which would have prevented them from investing in modernisation & upgrades during the lean period.

Add to this is the fear that the new Jio Convention Centre at BKC will eat into its business.

As per page 2, point (ii) of the Chairman’s Speech at the 63rd AGM attached for reference, BEC has the capacity to hold 150 exhibitions per annum, whereas the last year saw only 16 exhibitions, which is barely 10% of the capacity. In other words, BEC could increase its exhibition business by 10x without any new major capex.

The Annual Report 2022 page 20, mentions that in a typical year, BEC can hold 745 different events (not just exhibitions).

During COVID, many people claimed that work from home and online marketing will be a permanent change. The touch & feel of seeing products in real or watching gadgets / equipment “live in action” in a physical exhibition is not possible to replicate with an online digital medium. Therefore, I do not believe that exhibitions are dead. My belief is that face-to-face interactions with clients, suppliers, live product displays etc. are all either back to normal or on their way to returning with a Big Bang.

Many tech companies have also raised a problem of employees’ moonlighting due to work from home (i.e. working on a 2nd job). While the right & wrong of moonlighting are being debated (and I do not wish to comment on that), the only meaningful way for the management to control this problem is to bring everyone back to office. Meaning, NESCO’s IT Park should also see good demand going forward.

As described by some of the earlier posts, Jio’s Convention Centre is not a direct competitor to BEC. So I won’t repeat this point.

Against a 10 year median value P/B of 3.4, the current P/B is only 2.7. NESCO’s sales & income both appear to be severely depressed on account of COVID factors, which now appear to be in the rear view (hopefully). The major long term valuation depressor would be that NESCO’s single location risk has now been thoroughly exposed.

However, I think that the earning power of the main assets that NESCO owns - BEC and IT Park has not diminished in any way. Many of us may have encountered the post-COVID huge spike in prices of all events - weddings, parties, etc. It is very much possible that with a sudden surge in demand for exhibitions and no major supply of new exhibition centres in Mumbai, BEC should be able to even command premium pricing.

I feel that the bad news has been baked into the price and we should be able to see mean reversion in the business prospects as well as stock price.

Disc: Biased, invested from much lower levels and holding for more than a decade



FIIs have increased stake in September 22 we may expect some positive move in near future. So far this stock has disappointed a lot.

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Anyone aware of IT Building 4 occupancy percentage…is it fully rented out ?

b91b1248-e596-43e8-9106-c37f2b614b16.pdf (6.4 MB)

very good result…seems NESCO is back to normal business…


Invested and Max Capital Allocated in Portfolio to Nesco