Saturday, December 26, 2015

NESCO: A Study from Investment point of view

How I Identified stock

My father is in a business of supplying construction material, hardware tools, and paints. Most of the Sundays, he would visit Bombay exhibition and convention center located in Goregaon(E). He finds such exhibition very useful for small businessmen like him. In the exhibition, he would meet companies’ representative and also representative of competitors and learn about new products and services available by way of live demonstration. Then he would take contact details and analyze how he would incorporate these new products into his current product portfolio.

One Sunday morning, I accompanied him to the exhibition. I was thrilled ample of area reserved for parking and permanent structure of exhibition center. We could avoid scorching summer heat outside, by checking new products in this air-conditioned hall. We completed checking out all stalls by early evening. While, returning I was amazed to see the crowd of enthusiast people flocking at the exhibition hall. The boundless area that was reserved for parking was almost full with cars and bikes.

Returning to home, I decided to study company ‘Nesco’ that owns the land of Bombay exhibition and convention center from investment point of view.

Investment Rationale
  • Consistent and secured cash flow: Revenue is in the form of rental income from leased property of Nesco IT park& Bombay Exhibition Convention Centre (BCEC).
  • Expansion Plan: It has plans to expand exhibition area to 1mn sq. ft from current 450,000 sq. ft and start construction of IT building 4. Once both this projects are operational, large proportion of revenue will flow in.
  • Debt free: All construction cost are financed from internal accrual. High liquid investment, it is estimated that future construction cost would be met from internal accruals only and the Company would not rely on external financing.
  • Land: Almost 70 acres of land in prime location of western express highway with close proximity to the airport is available for development.

Read complete Analysis of Nesco