when a bird in hand is worth 'LESS' than two in the bush

Covid like any calamity has near term beneficiaries :-

• Packaging companies saw a collapse in there input prices thus margins expanded
• Uptick in demand for sanitizers benefited some chemical companies
• Cycles are out of stock as personal mobility is being chosen over shared mobility    

Most of the above players have made new highs but they are not secular growth stories. The likelihood of a change in factors for this near term out-performance is question of when not if. 

Covid like any calamity has near term sufferers :-

• Multiplexes have yet not been allowed to open
• Malls/ Retailers have seen a drop in footfalls
• Hotels/ Restaurants have seen loyalty erode from the most sincere patron

Some of these were secular growth stories & now the business model is being questioned. The likelihood for a change in factors for this near term pain & thus a return to near normalcy is a question of when not if.  

One interesting play of a business seeing near term pain is Nesco Ltd. 

• Nesco is Mumbai's largest exhibition cum convention center(6.6 lakh sq feet). 
• The company is strategically located on Western Express Highway in Goregaon. ~70 acres of land.
• Nesco is also home to an IT park of ~2.5 mn sq feet with almost 90% occupancy. 
• While IT park continues to function normally, the business from the exhibition center has come to a halt. 
• The company is expected to generate ~200 crores of cash flow from the IT park in FY21. It sits on cash of ~ 700 crores & the entire business is available for ~3500 crores. 
• The exhibition center generated ~125 crores in FY 20 & is expected to do better once covid normalizes.

Besides the above the company has an FAR of ~10 mn sq feet for more IT parks & another 5 mn sq feet for incremental exhibition space thus the future revenue potential without acquiring any land is ~5x of today.     

At current prices I am willing to forego my cyclical stocks delivering good Q2 numbers for this structural story which will deliver good FY 22 numbers. I am going for the two in the bush. Lets see how this pans out.