NESCO LTD. is a Bombay based company. This company was earlier known as New Standard Engineering and its plant was located at Goregaon. The plant has been relocated and there is about 70-72 acres of land in Goregaon (Mumbai), which the company has been using for real estate development.
This company derives revenues from three lines of business. Its earlier business, which is a capital goods business, contributes about Rs.30 Cr to the revenues. The company operates an exhibition center called Bombay Exhibition Centre at Goregaon, which is spread over an area of about 5 lakh sq ft and it is a largest private sector exhibition centre in the country. It ranks only next to Delhi’s Pragati Maidan, which is owned by the government. This company has about 70 acres of land on the Western Express Highway at Goregaon, on which company has built two IT parks, which have been given on rent to various corporates. The third building is also almost ready and will start contributing to the rental income in the coming quarters.
At the current price of about Rs.1,100, the market cap of the company is about Rs.690 Cr. This company is totally debt free company, it has got cash and cash equivalents of close to Rs.125-130 Cr, which means an enterprise value of about Rs.550 Cr for the company. This company made a profit after tax (PAT) of about Rs.35 Cr last year. This year, it will do more than Rs.40 Cr. So Rs.40 Cr of PAT from rental income, it is mainly from rental income and less from the capital goods business, current valuation is just about Rs.550 Cr and the company has utilized only about 20% of the total land, which is available with the company. Further real estate projects done on that land will continue to generate good rental income for the company in the coming years. So we see a lot of scalability in the business of the company, they have got cash flows to do further construction. They are sitting on cash of about Rs.125-130 Cr plus more is coming by way of rentals from the various buildings, which they have made. Going forward, the valuation of this company looks attractive and there is definitely scalability potential in the company. I think at the current price of about Rs.1,100, this company is capable of generating 50-60% return at least in year’s time.
3 comments:
Really good post.Please more about this company.Thanks.
Work from home India
how much would be the total value of the real estate.
i am holding 50 shares at 600 rs.
Nesco has huge land in Mumbai suburb called Goregoan which is upcoming center for the Corporate Offices. i.e. Recently many well known companies have shifted from Andheri to Goregaon. nesco has around 70-80 acres land which may have value of around atleast 5000 Cr or so. Not sure but has good potential.
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