Nesco

Stock Opportunities Not-so-Hidden Gems
61

Here you go Ayush -

62

Hi,

My office is next to NESCO. i will try to go tomm/day-after to try and find out the number of floors leased.

regards,

saurabh

Link: http://www.moneycontrol.com/news/stocks-views/nesco-may-test-rs-900-bhavin-desai_983887.html

63

Thanks Saurabh.

While passing through Nesco on the highway I havenā€™t seen too much activity as far as development of the floors go.

However, itā€™d be great if you get the opportunity to check this out by going there.

64

Would like to have feedback of Saurabhā€¦that may be an actual feedback.

65

hi saurabh

do u have any idea about nirlon as there phase 3fit-outis likely this quarter and lease rate hike (15% every 3 years ) for phase 1 & 2 will kick in this year.

and there were news thatBarclay has leased 2 lakh sq. at 95Rs. / month.

so if debt payment reduces interest outgo and new rental income willmaterialize.

this can be good story .

any updates from your side on this .

66

Tried my hand at a little scuttlebutt for the first time ever today. Here is an update on it, hopefully it is of some use. If you feel it is too amateurish kindly ignore :slight_smile:

I went to NESCO with a two pronged agenda today. <1> To attend Comicon (convention for comics) <2> To find out how many floors have been leased for IT Bldng No. 3 and to whom.

Upon nearing the facility the first thing I noticed was the crowd. There were 3 exhibitions going on and the place was very crowded. Instantly it made me feel comfortable (as someone who is invested in this story). The crowd presence validated the exhibition business is doing well.

On entering I had to pay 100 bucks to park!!! (considering Iā€™m a a super minor stakeholder I wasnā€™t too happy paying for it :wink: ) Nevertheless it made me happy thinking the company must be making close to quarter of a crore per year (50 events * 100 bucks per car * 500 cars per event) only through parking money (they surely are milking the captive audience). It also dawned upon me that the promoters (their son) plans to start a catering business to target this captive audience (once inside and hungry you have no option but to eat there). My gut feeling is that the company should be able to make some money by offering a service like this to the people present at the premises (there is already a cafeteria present thereā€¦not sure who owns it?). If no food is offered within the premises people will have to spend at least few hours going hungry or walk about 1-2 kms from the exhibition centre to HUB mall to grab a bite.

Moving on to the convention. While entering the security was lax and it did made me nervous as an investor. If anything untoward happens here the exhibition business will truly go kaput (mainly due to loss of reputation and destruction caused). Hope they work on improving security (security was private and was offered by TOPS group). Once inside the place was filled for the event and this again brought a huge smile to my face. It reiterated the fact that exhibition business is doing well.

After spending a few hours at the convention I headed to IT Park 3 to find out about occupancy. While getting there I passed through the incubator shed. Didnā€™t try finding out or exploring much of it.

Once at IT Bldng # 3 I managed to get the following information. The bldng has 13 floors. 3 floors (including the ground floor) are for parking. Of the remaining 11 floors about 6.5 have been leased out. 3 floors have been leased to HSBC. 1 Floor to KPMG. 1/2 a floor to Religare and 2 floors to JPM (my guess is JP Morgan). The above information has however been gathered from the security guards and contractors present there. There was no one of note who I could speak to today (it being a Sunday!!). If anyone else at Valuepickr can corroborate this itā€™ll be great. Also now while passing the building in the night I see the lobby and a few floors lit up (my guess is firms will start moving in over the next few months).

In all after spending a few hours at NESCO I remain convinced about their exhibition business, the IT Parks and about the value of asset/land they own. Nothing can beat 70 acres of land close to such excellent means of transportation in Mumbai. Considering all of this I believe it still remains a very undervalued business!! Over the next few months Iā€™m looking to up my holding in NESCO.

Disc: Invested.

2 Likes
67

Thanks Aman - I have been watching NESCO for the past 3 years. Missed a huge opportunity. Now, itā€™s time to act. Iā€™m also fully convinced at NESCO story. Will start buying from now on.

68

Hi Aman,

Thanks for the input. As per AR-13, IT Building 3 total area constructed is 6.6 lsf, going by your above scuttlebutt, Co. has leased out 6.5. So, it seems the entire area has been leased out.

69

Hi Aman,

Thanks for the input. As per AR-13, IT Building 3 total area constructed is 6.6 lsf, going by your above scuttlebutt, Co. has leased out 6.5. So, it seems the entire area has been leased out.

70

AR says IT Building 3 has 6.6 lakh sq feet.

Aman said 6.5 floors leased out of 11. Are you comparing the right data, Vinay?

71

Hi Aman,

Thanks for the input. As per AR-13, IT Building 3 total area constructed is 6.6 lsf, going by your above scuttlebutt, Co. has leased out 6.5. So, it seems the entire area has been leased out.

To clarify I meant six and a half floors (6.5) of the 11 have been leased out and not 6.6 lsf. Apologies for any confusion caused.

72

Hi Jatin,

My bad, not interpreted the data correctly. Was in too hurry to interpret that the whole building has been leased out.

Thanks Aman once again for the clarification. My interpretation was wrong, I should apologize.

73

Nice work, Aman. Thanks. Please provide further updates, if any.

:))

74

Aman, that was very useful info. So, they havenā€™t yet been able to lease out 4.5/11 floors. Anyway that also means that they have 4.5 floors ready to be monetized. Wonder why it is proving ifficult to lease out space in such key locations as well.

75

Avinash to me its a matter of ā€˜whenā€™ and not ā€˜ifā€™ the office space will be leased out. Iā€™m putting a link to an article below which talks about how BKC has 36L sq ft of unused office area. The article also mentions additional 20L sq ft of office space is going to be added across Mumbai in the next one year (thus increasing competition for NESCO).

The article also clear states preference of companies moving into office spaces that are affordable (office space in NESCO is affordable). The statement that offers most encouragement to me in this article is this one -

ā€œMicro-markets like central Mumbai, Navi Mumbai, Andheri (east) and western suburbs together constitute 70% of the total absorptionā€

Overall the article is an interesting read -

http://articles.timesofindia.indiatimes.com/2014-01-13/mumbai/46148474_1_fifc-sq-ft-office-space

76

_ ā€œMicro-markets absorptionā€ _

Link: http://articles.timesofindia.indiatimes.com/2014-01-13/mumbai/46148474_1_fifc-sq-ft-office-space

77

A quick confirmation on the scuttlebutt that was carried out. I had stated 1/2 a floor has been leased by Religare. Here is a confirmation of the same -

http://www.aegonreligare.com/locate-branch/maharashtra/mumbai-goregaon.

So this establishes 3.5 floors have definitely been leased out. 3 to HSBC and 1/2 to Religare. Will keep digging for more info on the rest - have drawn a blank so far.

78

Thanks for the confirmation on this Aman. Really helps establish where the IT building 3 is heading. Wont be long before we see the other floors move off too; the better part is they dont have to ā€˜sellā€™ it because it is a locality and a place which sells well anyway.

The exhibition business shows no signs of slowing down.

I had been there personally too for an exhibition and the amount of land bank in the heart of the city is simply astounding. There seems to be not much competition for the exhibition space too; only world trade center(nariman point) and BandraKurlaComplex. But most exhibitors prefer BEC because of its mulitple advantages.

79

Hey, not trying to bombard the NESCO forum - however I have dug up some more information.

I believe they are working with CBRE in leasing out floors in IT Bldng 3.

About CBRE: The first international real estate services firm to set up an office in India. As the leading real estate services firm, we provide our clients with a wide range of real estate solutions including Agency Services, Asset Services, Brokerage Services, Capital Markets, Project Management, Strategic Consulting and Valuations/Appraisals. Our guiding principle has been to provide our clients with tactical and strategic solutions that make real estate holdings more productive and economically efficient.

On the CBRE website came across this document - http://www.cbre.co.in/AssetLibrary/Nesco,%20Goregaon%20East[2].pdf

It can be found here as well - http://www.cbre.co.in/propertylistings/Pages/property-listings.aspx

This document was created in 2013 and the last page has a box which lists ā€˜Building Tenant Profileā€™ with SF leased to each. HSBC has 180000 SF, KPMG has 60000 SF, Ericsson has 30000 and Religare 30000.

So effectively 3 floors have been leased out to HSBC (180000 SF), 1 floor has been leased out to KPMG (60000 SF), 1/2 a floor has been leased out to each Religare and Ericsson (30000 SF) = 1 floor. This gives us confirmation on 5 floors (300,000 SF) being leased out.

So, scuttlebutt established 6.5 floors have been leased out. Bhavin Shah stated 9 floors have been leased out. Googling confirms 5 floors have been leased out. I guess over time we will get a sense of how many floors have actually been leased out and what kind of revenues have been realized as rent in this FY.

The doc shared also includes some other plans for the 65 acre land. Not really sure how much of these will actually fructify. I hope they stick with the exhibition business and leasing out bldngs for commercial use - itā€™d make things more certain on how they plan to spread across the 65 acre property!

1 Like
80

Thanks for sharing the information and the document. Useful!

This: ā€œ3 hotels spanning Boutique to 4-star luxury categoryā€ as mentioned on the document can be a big trigger imo. Its a great value addition to have a hotel in the campus which can be provide occupancy from the exhibition business as well as the corporate business. Sure shot hotelier groups would be awaiting the opportunity to open up in NESCO.

The IT building 3 status also gets validated in the document. May be we can contact the manager as mentioned on the document to know the precise status of other pending floors.