I was invested in Nesco since 2019 and added more shares each year until 2023. I finally sold my shares in 2024. In 2019, their new IT park was slated for commercialization, but COVID delayed full occupancy. Once the park reached full utilization and their exhibition business rebounded beyond pre-covid peaks, I estimated a modest 6-8% sales growth until their next IT park, which is atleast 4-5 years away. Post-COVID, company adopted an ultra-conservative approach, repeatedly deferring plans for a new park, citing the need for government approvals for higher FSI. At a ~20x PE, which is towards the higher side of their historical valuations, I decided to reallocate capital to businesses with stronger growth potential and a larger valuation mismatch. Sharing my notes on Nesco in case they are helpful.
Provides rent-free six month period to lessees for testing (called fit-out)
Indrabator business (capital good) is doing badly, the promoters are attached to it thatâs why it still exists
Delay of 1 year in construction has happened in the past (3 years instead of projected 2 years). Takes about a year to fill new building with tenants
New convention center land was allotted to Reliance in 2006 and it was supposed to build it by 2010, it is still incomplete!
Revenues went down after 2008 crash for one year and then went right back up. Also revenues went down after terrorist attacks
Low dividend payout ratio (8%) to fund future expansion of IT parks. Management has always been super conservative and not taken debt, instead paid out very small dividends and built up cash reserve to fund future expansion
Company has been able to increase lease per square foot quite consistently. So growth is from new buildings + increase in leases
Sumant Patel (father) â super conservative, Krishna Patel (son) â innovated by leasing out BEC for B2C events (concerts, bookmyshow things, etc.)
Have 15-17 acres of land in Gujarat
Will start a hotel at some point, but will outsource running of hotel to a big brand as it is not their competence (link)
Between 2009 and 2015, the revenue per month per sq ft trebled for the BEC
Hello Harsh sir, In Hariom pipes, yesterday, rating agency ( Care ) has rated the company âIssuer Not Cooperatingâ since 2021-22âŚ, whereas on 5/6/2024 rating agency ( Crisil ) has given rating accordingly. ( Not tagged - Issuer not cooperating ). How can we analyse it?? Thank you.
Its well convered by Harsh SirâŚIf you see at it its more like a FD(their land) which is generating returns, they arent that aggresive to be able to take advantage of the land at such a great location. I have been staying in the area apart from the one building they added havent seen much for the last 10-15 years
This happens when a company intended to switch itâs rating agency so one agency gives issuer not supported and other issue rating. Going forward you see only crisil reporting. Not an issue
Stock-in-Trade represents a trading activity where goods are bought and immediately resold. Inventory = part of manufacturing
To calculate the Total Cost of Materials Consumed, you should only consider costs related to raw materials used in production. Stock-in-trade purchases are accounted for separately as part of trading activities.
Thank you very much for your help. However, I still have a doubt regarding point 1, which deals with the difference in inventory numbers at the start and end of the year.
Note 24 tells amount of raw materials that got consumed in the year to make finished product. This is calculated by beginning inventory + new puchases made in the year - ending inventory of raw materials.
Note 26 tells amount of finished goods/WIP items left unsold during the year. This unsold part should not be counted in COGS and hence COGS would be -
= 1743 + 360 - 110
Purchase of stock in trade is added to get overall cost of goods sold.
Hey @harsh.beria93, What are the headwinds with Dreamfolks? I heard they are not able to maintain pricing but donât know why and if thereâs any other headwind?
Dreamfolks is a good busines - but its fortune seems to be tied to rentals brokered to them by airports. Once dreamfolks make money they will be charged good rentals on lease renewals.
Negotiations in discussions? No way - Airports will always have an upper hand and lounges are not a must to have for Airports in times like these where air travel is a necessity and ppl will flock the airports almost every time of the year now.
And i wonât term it as headwinds, its just a thing where you need to understand the issue when they scale and their bottom line starts looking lucrative to outside world too. And it has been a problem for sure.
Great! Agree that itâs not headwind but more a structural issue.
Dreamfolks donât run these lounges right? It just curates the supply and provide connection to issuers/card schemes.
Are you suggesting that the lounge operators will have to pay higher rental which will pass on that higher cost to Dreamfolks?
Quite keen to know your annual review of portfolio, your comments on overall view on current state of markets and may be an yearly update of current portfolio construction as last detailed update was an year ago.
hello sir, I really liked your mean reversion strategy in stocks picking & i also get benefited from your mean reversions picks of stocks. Are you find any mean reversion play in current market environment ?
Dear @harsh.beria93 are you looking in wine space where Sula had horrible year therefore base is right for next year but Fratelli & Sula both are expanding capacity along with increasing the Marketing expense how these fare and do you track these companies?
And also do you have looked into Matrimony, Dreamfolks & Indiamart platform business where they are ignored in current market thus available cheap and they are profit making as compared to other platform plays out there.
if valuation are high, like crossing historical PE, U must atleast book profits, if u believe the story of AMC in tact and market will bounce back. Or Full exist and wait for turaround. As it is sun rising industry.
You can get it on screener, just go through PE chart on different timelines 3y, 5y,10y etc, you can get the mean PE for the respective historic timeline.
