Another fundamental question…If FSI can be expanded to the maximum limit, then this can be implemented only by building more floors on the existing tower.
Does it mean the number of floors will increase by 5 folds?
If so, will they demolish the existing building and construct ? (If yes, then FSI improvement is a very long term story but not medium to long term) or they already designed the basement with enough strength ?
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They have demolished old buildings and constructing new ones.
Whats the source of this information @Mudyt1
Nesco seems to be up today only because there is a news that Parag Parikh MF invested in it…big following of that fund 
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Shows diverse avenues to make money once you have real estate in the right location…
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Board approved a budget of up to ₹3,500 crores to develop Tower 2 in their IT Park at Nesco Center in Goregaon, Mumbai. The funding will mostly come from the company’s own resources.
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Tower 2 Potential:
- capex of upto ~Rs 3500 Crs announced in June 2025
- will start construction in Q3 FY26 and will complete in 24 months. Expected around Q3 FY28.
- Office space of up to 1.65 million sq. feet = 153,290 sq. meter. Current capacity of Tower 3 and 4 combined is a chargeable area of 165,830.5 sqm. An increase of 92% from current capacity in sqm.
- Rental income from Tower 2 in FY29 (92% of FY25 income from realty) = Rs 336 Crs at full occupancy
- ignoring inflation increase in rent to keep estimates conservative
- At 80% EBIT margin, FY29 EBIT from Tower 2= Rs 268 crs
4-5 Star Hotel
- 732 rooms
- 172 serviced apartments
potentially the largest hotel in India
- Hotels adjoining exhibition centers mint a lot of premium because of the easy access to exhibitions
- Personally noticed that is difficult to get a decent hotel nearby NESCO at a fair pair whenever a large exhibition is being hosted. A friend of mine faced this problem who went to exhibit in a textile expo
- Room rates of 5 start hotels in Goregaon is around 9-10k on average for hotels like Courtyard by Mariott, Westin, Raddison, etc.
- Avg rate for serviced apartments assumed at Rs 13k per night, with occupancy of 70%
- Hotel occupancy rate in Mumbai was 80% last year, a record high! Demand is more than supply. Supply is difficult as core areas are clustered and land prices are very high, so very few new hotels coming in.
- Conservatively, Assuming:
- Average room rate = 9k
- Occupancy rate = 70%
- Rev potential of 732 rooms = Rs 168 crs
- Rev potential of 172 serviced apartments = Rs 57 crs
- Other revenue (F&B, meetings and weddings) = Rs 72 crs
- Total Revenue = Rs 297 crs
- With 30% EBIT margins, EBIT = Rs 89 crs
EBIT from new capex expected by FY30 = 357 crs
FY25 EBIT = Rs 422 crs
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So it will not be a good capex as they will generate around 10% (357crs) operating profits by investing Rs.3500crs. not great
Prashant
Very Nice work. Nesco IT Park Economics – A Closer Look
HSBC recently renewed its lease in Goregaon East at ₹191/sqft/month. Given Nesco’s new premium construction and a conservative estimate with a 5-6% annual escalation puts achievable rental at ₹235–250/sqft/month in the coming years.
For the upcoming 1.65 million sqft IT space:
- Revenue Potential (@₹235/sqft): ₹465 Cr annually
- EBIT Margin (85%): ₹395 Cr
- Capex for IT Block: ₹1,200 Cr (considering 33% of total space)
Yield: ~32% EBIT return – looks quite healthy
But here’s where it gets interesting (and questionable):
The remaining 3.35 million sqft (non-IT, likely hotel + exhibition + commercial mix) absorbs ~₹2,300 Cr of capex.
Above calculations indicates only ₹90 Cr EBIT from this portion – that’s just a 1.3% return!
This massive gap raises important questions:
- What is the nature of the remaining development?
- Is there a phased monetization plan or strategic asset build-up?
- Are other revenue streams (like MICE, events, F&B) being under-accounted for?
Definitely something that warrants deeper discussion with the management.
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It’s not bad either, as surplus deployed in MF & FD doesn’t generate 10% returns.
Efficiency of scale and inter connected benefits from different segments needs to be taken into account.
Guests from Exhibitions / Events / Banquets / IT parks will ensure higher occupancy at Hotel.
More occupancy in new IT Park will ensure more supply of food for Foods division. More visitors at exhibitions / events mean more foot-fall at restaurants also.
More visitors mean more parking charge collection also.
Integrated facilities mean more likely preference among organisers / event hosts to organize exhibitions / events / party functions at NESCO and hence more premium pricing for Hotel & Restaurants.
Additional revenue from newly started exhibition hall no. 6 is not counted.
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Hi , Can sone member help me on he growth prospects in this company, I have come to following conclusions
-
NESCO Realty IT park: It is operating at full occupancy of 100% in tower 3 and tower 4, so unless tower 2 is completed there is little scope of increase in revenue from this segment.
-
BEC Exhibitions: Already the margins and revenue are declining due to the competition, though Hall 6 has been completed, but shall it be able to overcome the decline?
These two segments constitute the major part of the revenue and margins
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Indabrator: The margins are too less, the revenue growth is almost flattish, infact a miniscule decrease
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Nesco Foods: This is more largely dependent on 1 and 2. If those segments perform well so it does. though margins and revenue growth are decent in this segment
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New Entry: Wayside Amenities : The company has scured 3 tenders from NHAI, too early to comment on this
So what are the expectations of revenue, profit growth and margin expansion in near term, though it seems good on long term as the tower 2 construction has still to be started and will take about 48 months. So what shall be the trigger for the near term growth? If any member can share his/her views
Disclosure: Not SEBI-registered. This is for informational/educational purposes only, not investment advice. Do not buy or sell based on this information. Consult a SEBI-registered advisor. Investments carry risks. The views are personal opinions, no guaranty of accuracy
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NHAI_WSA_Brochure.pdf (7.2 MB)
Source: https://nhai.gov.in/nhai/sites/default/files/mix_file/NHAI_WSA_Brochure.pdf
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Has anyone has analysed Nesco Q2FY26 results? Request to share the inputs