🧭 At a Glance
NESCO Ltd (market cap ₹7,103 Cr) runs premium IT parks, exhibition grounds, capital-equipment manufacturing, and hospitality. FY25 consolidated sales hit ₹732 Cr (5-year CAGR ~16%), net profit ₹375 Cr (CAGR ~25%), with ROCE ~20% and P/E ~19x. Debt is negligible, but working-capital days have ballooned to 100—are investors paying for prime real estate or just prime headaches?
1️⃣ The NESCO Evolution: From Niche to Nice-to-Have
- Founded: 1939 (earlier as Bombay Exhibition Co.)
- Listed: 1993 on BSE & NSE
- Core Pivot:
- Pre-2000: Exhibition grounds
- 2004-10: IT parks (Mumbai’s Goregaon East)
- 2010-15: Capital-equipment & machine tools
- 2015-20: Hospitality & catering
Why it matters: NESCO now juggles four distinct businesses. It’s like a restaurant that serves sushi, pizza, and biryani—versatility for diversified revenue, but complexity for operations.
2️⃣ Segment Breakdown: Four Wheels on One Chassis
| Segment | FY25 Revenue Share | Key Metrics & Clients |
|---|---|---|
| 1. IT Parks | 41% | 98% occupancy across 166,830 sqm; tenants: HSBC, KPMG, PwC, BlackRock, MSCI |
| 2. Exhibitions & Leasing | 18% | India’s largest exhibition grounds (NECC): 26 acre, 20+ annual shows |
| 3. Machine Manufacturing | 22% | ‘Indian Centre for Plastics’ – machines for packaging & plastics sectors |
| 4. Hospitality & Food | 19% | Banquets, catering, three hotels; 60% banquet utilization |
- IT Parks (41%): Steady rental income with multinational tenants paying ₹200–₹350 per sq ft.
- Exhibitions (18%): 8 exhibitions lost to COVID; post-pandemic bounce: 90% of pre-COVID footfalls.
- Manufacturing (22%): Margins ~15%; cyclical capex demand from FMCG & pharma clients.
- Hospitality (19%): Banquets & hotels filling ₹1,500–₹5,000 per night; margin ~25%.
Takeaway: IT parks deliver stable annuity; exhibitions & hospitality are seasonal; manufacturing is cyclical.
3️⃣ Financial Trajectory: Profit & Loss Over Five Years
📊 Consolidated P&L (₹ Cr)
| Year Ending Mar | Sales | Net Profit | OPM | EPS (₹) |
|---|---|---|---|---|
| FY21 | 432 | 234 | 64% | 33.18 |
| FY22 | 337 | 172 | 65% | 24.48 |
| FY23 | 546 | 291 | 67% | 41.25 |
| FY24 | 678 | 363 | 63% | 51.49 |
| FY25 | 732 | 375 | 60% | 53.25 |
- Sales growth: 70% in 5 years (CAGR ~11%)
- Profit growth: 60% in 5 years (CAGR ~9%)
- Margins: OPM hovers between 60–67%, thanks to high-margin IT parks & exhibitions
- EPS: ₹24 → ₹53 (+120% over 5 years)
Commentary: FY22 dip reflects COVID shutdowns—exhibitions canceled, banquet halls empty, hotels ghost-towned. But FY23–25 bounce-back is strong, highlighting the annuity-like nature of IT-park rentals and resurgence in events.
4️⃣ Balance Sheet & Cash Flows: Debt-Free but Working-Capital Strain
🔍 Key Metrics (FY25)
- Equity + Reserves: ₹2,629 Cr
- Borrowings: ₹1 Cr (virtually debt-free)
- Fixed Assets: ₹916 Cr (up from ₹757 Cr in FY24)
- CWIP: ₹753 Cr (massive capex at NECC expansion & new towers)
- Operating Cash Flow: ₹349 Cr
- Investing Cash Flow: –₹315 Cr (capex and CWIP)
- Free Cash Flow: ~₹34 Cr
🔄 Working Capital Days
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Debtor Days | 14 | 37 | 20 | 8 | 8 |
| Inventory Days | 132 | 51 | 82 | 162 | 753 |
| Payable Days | 151 | – | – | 93 | 63 |
| Working-Capital | –37 | –55 | 2 | –21 | 100 |
- CWIP blow-up: CWIP jumped from ₹162 Cr to ₹753 Cr as new tower construction surged.
- Working-capital days: Went negative during efficient exhibitions, then turned positive as CWIP and receivables ballooned.
- Free cash flow: Barely positive; future FCF depends on completion of CWIP and stabilization of receivables.
Red flag: Large CWIP and rising working capital days signal a potential cash-flow pinch if project timelines slip.
5️⃣ Shareholding & Valuation: Who’s Betting on NESCO?
| Holder | Mar 2025 | Trend |
|---|---|---|
| Promoters | 68.54% | Steady |
| FIIs | 4.90% | ↑ (from 2%) |
| DIIs | 3.19% | ↔ |
| Public | 23.38% | ↔ |
- Promoters (Shapoorji Pallonji Group) retain strong control.
- FIIs ramped up post-pandemic, drawn by stable rental revenues.
- Public float ~23%, liquidity moderate — average daily volume ~150 K shares.
🔎 Valuation Multiples
| Metric | Value |
|---|---|
| CMP | ₹1,010 |
| P/E | 18.9x |
| P/B | 2.7x |
| ROCE | 20.4% |
| ROE | 15.2% |
| Dividend Yield | 0.64% |
Perspective: P/E ~19x for a multi-segment real-estate cum events business is fair, given debt-free balance sheet and ROCE >20%.
6️⃣ KMP – The Architects and Operators
| Name | Role |
|---|---|
| Mr. Shapoor M. Mistry | Chairman (Non-Executive) |
| Mr. Patil J. Patil | MD & CEO (Whole-Time Director) |
| Ms. Jyoti Sharma | CFO & Executive Director |
| Ms. Anjali Desai | Company Secretary & Compliance Officer |
- Patil J. Patil, the face of NESCO operations, has overseen IT-park expansions and diversified into hospitality.
- Shapoor Mistry, veteran SP Group board member, provides strategic oversight.
Note: No sudden exits—KMP tenure has been stable, a boon for continuity in large infrastructure projects.
7️⃣ Risks & Catalysts: Will the Tower Stand Tall?
✅ Catalysts
- New Tower 5 & 6: Adds 200,000 sq ft of leasable IT-park space by FY27.
- NECC Phase II: Exhibition hall expansion (+40% capacity) slated for FY26, hosting bigger shows (Auto Expo, Mela).
- High-end Hospitality: 200-room hotel at campus, tapping MICE tourism.
- Machine Tool Demand: “Buy India” policy & pharma-packaging demand to buoy machine-sales segment.
⚠️ Risks
- Project delays: CWIP immersion—delays => cost overruns, cash crunch.
- Cyclic exhibitions: Large shows vulnerable to macro slowdowns & regulatory permits.
- Hospitality headwinds: New hotel needs ramp-up; MICE segment still recovering.
- Interest rate hikes: Even debt-free, higher rates can dampen event bookings and corporate leasing.
🧮 Fair Value Range
1. DCF-Lite (P/E Approach)
- FY25 EPS: ₹53.25
- Assume 10% EPS growth next 2 years → FY27 EPS ~₹64
- Reasonable P/E: 16–20x for mixed real-estate/services
- FV: ₹1,024 – ₹1,280
2. NAV Walk (P/B Approach)
- FY25 BVPS: ₹373
- Target P/B: 2.5–3.0x (decent ROCE & projects in CWIP)
- FV: ₹933 – ₹1,119
Consensus FV: ₹950 – ₹1,250 vs CMP ₹1,010 → near fair value, slight upside if expansions open on time.
TL;DR 📦
- NESCO has four business engines: IT parks (41%), exhibitions (18%), manufacturing (22%), hospitality (19%).
- FY25 sales ₹732 Cr (+6.3% YoY), profit ₹375 Cr (+3.3% YoY), margins ~60%.
- Debt-free, ROCE ~20%, P/E ~19x, P/B ~2.7x—valuation looks fair for a mix of annuity and growth.
- CWIP & working-capital days ballooned, requiring careful cash-flow management.
- Key catalysts: New IT towers, NECC expansion, hotel ramp-up, Government capex.
- Fair Value: ₹950–₹1,250. Invest for stable rentals + MICE recovery; watch project execution closely.
Tags: NESCO Ltd Recap, IT Parks India, Exhibition Halls, Real Estate Services, EduInvesting, SP Group, MICE Industry, Capex India, Debt-Free Stocks, High ROCE Real Estate
✍️ Written by Prashant | 📅 17 June 2025
