Nesco: Attractive Real Estate Asset in Mumbai, with Growth Plans

Mehul Bhatt of OysterRock Capital presented his in-depth investment thesis on Nesco (India: NESCO) at Asian Investing Summit 2020.

Thesis summary:

Nesco converted into a pure lease rental business in the 1990s. Nesco owns 65 acres of land in the Mumbai suburb of Goregaon. The land parcel has excellent connectivity and is in close proximity to both Bombay airports. It is located along the western express highway (an arterial road) and the western railway line. This makes the 65-acre land parcel formidable for Nesco’s key revenue source: lease income from an exhibition center and IT park.

Nesco has four key lines of business: (1) exhibition center, (2) IT business park, (3) hospitality, and (4) an engineering business. Nesco has a “clean” business, a strong balance sheet, and transparent management. A history of healthy return-on-capital ratios, combined with an attractive valuation, offers attractive return prospects. Future growth plans, sufficiency of internally generated capital for funding growth, the size and locational advantages of the asset, a competent management, and a decent valuation make Nesco a viable investment idea.

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About the instructor:

Mehul Bhatt serves as Founder and Managing Partner OysterRock Capital, a value-oriented investment firm. Previously, Mehul headed equity fund management for the portfolio management services business of HSBC Asset Management in India. Before that, he worked with Credit Suisse India Asset Management, where he managed discretionary equity and fixed income capital on the wealth management platform in India. Mehul is a mechanical engineer and a management graduate from the Indian School of Business.