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India’s Incredible Economic Growth: An 8-Point Rollercoaster Ride to Prosperity!

INDIA’S INCREDIBLE ECONOMIC GROWTH: AN 8-POINT ROLLERCOASTER RIDE TO PROSPERITY!

Introduction

Today, let’s get on a quick rollercoaster ride to a thrilling journey through the vibrant landscape of India’s economic growth. Strap in, because we’re about to take you on a rollercoaster ride that will make your heart race and your optimism soar! India’s journey from an agrarian economy to an emerging global powerhouse is nothing short of spectacular, filled with twists, turns, and breathtaking moments. We will make eight stops where we will quickly look at what happened at each of those inflection points. Let’s go!

Stop 1: The Humble Beginnings

Our rollercoaster adventure begins in the mid-20th century when India gained independence from British colonial rule. At the time, the Indian economy was predominantly agrarian, with a largely unskilled and impoverished population. But as the nation took its first tentative steps towards economic development, a vision emerged—a vision of progress, prosperity, and self-reliance.

Stop 2: The Infamous Pitfalls

As our rollercoaster ascends, we can’t help but acknowledge the pitfalls along the way. India faced a fair share of challenges, from political instability to bureaucratic red tape. The License Raj, a system of extensive government control and regulations, stifled innovation and entrepreneurship. But every plummet into a valley was followed by a climb towards the sky.

Stop 3: The Reforms Take Flight

Hold on tight because here comes the exhilarating part! In 1991, India took a leap of faith with economic liberalization, opening its doors to foreign investment and dismantling the shackles of protectionism. The result? An economic take off that defied gravity! With reforms like the New Economic Policy, India’s GDP growth soared, and the country began to attract foreign investment like never before.

Stop 4: The IT Revolution

As we loop around the IT boom, it’s impossible to ignore the impact of the Indian technology sector. India became the world’s outsourcing hub, with Bangalore and Hyderabad emerging as global tech centres. The Information Technology and Business Process Outsourcing (IT-BPO) industry propelled the nation into the digital age, creating millions of jobs and fostering innovation.

Stop 5: The Demographic Dividend

As we zoom through the demographic dividend curve, we see that India’s young and burgeoning population is a vital asset. With a median age of 28, India is set to have the world’s largest workforce, potentially driving further economic growth as this demographic enters its prime working years.

Stop 6: Infrastructure and Connectivity

Our rollercoaster ride wouldn’t be complete without mentioning India’s massive infrastructure development. From world-class airports to modern highways and the ambitious Smart Cities Mission, India is laying the foundation for a robust economy that can compete on the global stage.

Stop 7: Challenges Ahead

As we head into the final stretch, it’s important to acknowledge that our rollercoaster ride isn’t without its share of challenges. Income inequality, environmental concerns, and social disparities are issues that need careful navigation. But India’s history has shown that it has the resilience and determination to tackle these obstacles head-on.

Stop 8: The Future Awaits

As we approach the end of our thrilling journey, we can’t help but feel optimistic about India’s economic future. With a dynamic and youthful population, a growing middle class, and a commitment to innovation, India is poised to continue its ascent towards prosperity.

Conclusion

India’s economic growth story is nothing short of awe-inspiring. From humble beginnings to global recognition, the nation’s journey has been filled with highs and lows. As we disembark from our economic rollercoaster, we’re left with a sense of excitement for what lies ahead. India’s incredible economic growth is a testament to the spirit of its people and their unwavering determination to create a better future.

So, here’s to India’s rollercoaster ride to prosperity – a thrilling adventure that shows no signs of slowing down!

The Money Memo (1)

A Zero-debt, Diversified Small Cap that Owns 70 acres of Prime Land in Mumbai!

A Zero-debt, Diversified Small Cap that Owns 70 acres of Prime Land in Mumbai!

What if I told you one of the best real estate small cap companies in India was debt-free and also holds 1600 crores in cash reserves?

Introduction

If you have been to Mumbai, then you would know that the two affluent suburbs of the city are Goregaon and Malad. And the latter is landmarked by Mindspace, that huge IT complex which makes everything look smaller in the vicinity. Similarly, there is another IT Park that stands tall in Goregaon. If you have ever driven on the Western Expressway, you cannot miss this one – the NESCO IT Park.

And today we will take a look into the company behind it.

NESCO Limited, also known as the New Standard Engineering Company Limited, is an Indian company with a rich history and a diverse range of business interests. Founded in 1939, NESCO has evolved over the decades and established itself as a prominent player in various sectors of the Indian economy.

Let us first look at a brief overview of NESCO Limited:

NESCO Limited was originally established as the New Standard Engineering Company in Mumbai, India, in 1939. The company started as an engineering and construction firm, primarily focused on industrial projects. Over the years, NESCO has diversified its business interests. Today, it operates in multiple sectors, including:

Real Estate: NESCO is well-known for its extensive real estate holdings, particularly in Mumbai. The company owns and manages commercial and industrial properties, including the iconic Bombay Exhibition Centre (BEC), one of India’s largest exhibition and convention centres. Also, if you have ever been to Goregaon, you cannot miss the NESCO IT Park, one of the largest in the city. NESCO has a land bank of 70 acres in Goregaon (I know right!) of which almost 80% has been utilised for the IT Park and the rest used for green spaces.

NESCO IT Park - Coworking Space in Goregaon East | WeWork

The NESCO IT Park in Goregaon, Mumbai.

Infrastructure: NESCO is actively involved in infrastructure development, through its wholly owned subsidiary Indabrator, the construction of roads, bridges, and other civil engineering projects. They are a significant player in Maharashtra and Gujarat and has a good hold in Mumbai for EPC projects.

Information Technology: NESCO has a presence in the IT sector through its subsidiary, NESCO Tech Limited, which provides a range of IT solutions and services. This is in addition to their IT Parks.

Bombay Exhibition Centre (BEC): One of NESCO’s most significant assets is the Bombay Exhibition Centre, India’s largest exhibition centre, which has become a hub for trade shows, exhibitions, and conferences in India. It hosts a wide variety of national and international events, contributing to India’s economic and business growth. The charges to showcase at BEC are one of the highest in the country, and with the elevation of Mumbai to newer heights with economic expansion in this decade, these charges are slated to go higher.

Bombay Exhibition Center · Exposition Center in Mumbai · Free listing venue in Venue Discovery

The Bombay Exhibition Centre (BEC) is the largest in India.

Food: Now this is something I am particularly interested in. Everyone knows that, with the huge population in our country and especially the cities, the food segment is a goldmine. NESCO has its own food brands that they promote through their cafeterias and canteens in the IT Park and elsewhere that spans from snacks to fine dining. I personally think there is a whole lot of scope of expansion in this particular segment. Currently the revenues from this segment are 11.65 crores and has the potential to go north of 50 crores in the next two years.

Zero debt, Large Cash Reserves and Latest Performance

I love companies with low debt. But having zero debt and managing almost 1600 crores in cash reserves? Now that is something made of dreams! NESCO has been a very financially responsible company from its inception and the company has been without any debt for years. In addition, they transfer a good portion of their net profits to their cash reserves (after paying the dividends, which has been very consistent) so that any business expansion can be financed internally and not with external borrowings.

Let us take a look at the performance of the company for FY2023:

(Source: NESCO Annual Report FY2023)

As you can see from the above, there is a clear drop in revenues and profits during the COVID-hit FY2021. But the numbers have been solid since then on a nice, gradual upward trajectory. I like to see a slow but consistent growth in numbers instead of haphazard volatility, and these graphs above are almost cathartic for me to see.

Being a real estate company primarily, being debt-free takes on an even better form because we know that even during a slowdown (which affects real estate the most), the company will thrive without having to resort to loans or worse go bankrupt. So, this also makes NESCO a great business in my opinion.

Future Outlook

The NESCO IT Park has a 90% occupancy rate with marquee clients such as BlackRock (world’s largest investment fund with AUM of $8.5trillion), HSBC, pWC, KPMG, WeWork and MSCI (Morgan Stanley Capital Index – a company that provides indexing services to financial markets worldwide) with two major towers. This occupancy rate is set to continue and the rental income from the same is set to increase in the future – especially with BlackRock forming a JV with Jio Financial Services and expanding further in India. The revenue from real estate has been increasing at a CAGR of 11%.

But the outliers in the business were NESCO Foods which saw a 225% increase in revenue from last year and Bombay Exhibition Centre (BEC) which saw a whopping 825% increase in revenue.

NESCO Ltd is a well-capitalized small cap company with zero debt and a very healthy cash position to help it expand its business for the future, riding on the commercial real estate boom that would be coming in this decade in India. It would be prudent for the intelligent investor to take a close look at this company as it can be a good addition to your stock portfolio for the future.

Disclaimer: The content of the above article is for information purposes only. Please consult your certified financial advisor before making any investments.