Nirlon — Q1 FY26 earnings call

Call held 12 Aug 2025

Management summary

Nirlon reported a strong Q1 FY26, with total income growing 6% year-on-year to ₹167 crores and PAT increasing 17% to ₹58 crores. The company maintained a high average occupancy rate of 97.5% and successfully re-leased or committed nearly all of the space vacated by Morgan Stanley, with new leases signed at higher rates and annual escalations. Management indicated that the full impact of these new leases would be visible in Q2 FY26 results.

Highlights

  • Total income of ₹167 crores, up ~6% YoY.

  • EBITDA of ₹132 crores, up ~8% YoY.

  • EBITDA margin at 78.93%.

  • Profit after tax (PAT) of ₹58 crores, up 17% YoY.

  • PAT margin at 34.95%.

  • Average occupancy rate maintained at 97.5% for the quarter.

  • Approximately 269,000 sq ft at NKP successfully licensed or committed to new tenants.

  • Board proposed a final dividend of ₹11 per share for FY25.

Key financials

  1. Total Income ₹167 Cr +6%YoY
  2. EBITDA ₹132 Cr +8%YoY
  3. EBITDA Margin 78.9%
  4. PAT ₹58 Cr +17%YoY
  5. PAT Margin 35%
  6. Average Occupancy Rate 97.5%

What they filed

Q1 FY27: revenue up 3.1%, net profit up 19.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue160 161 158 163 165 +3%170 +6%171 +8%168 +3%
EBITDA129 131 123 128 129 +0%132 +1%132 +7%129 +1%
Net profit56 58 54 58 148 +164%69 +19%71 +31%69 +19%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Dividend

  • Final Dividend per Share Dividend · FY25 · High confidence ₹11
    The Board has in its May 2025 meeting proposed a final dividend of Rs. 11 per share for the financial year ending 2025, subject to approval by the shareholders in the forthcoming AGM.

    — Rahul V. Sagar, Chief Executive Officer & Executive Director

Profitability

  • Shareholder Distribution Profitability · Ongoing · Medium confidence Maximize
    As we have been saying, and as we have been doing, the company will endeavor to maximize its distribution to shareholders using a surplus cash flow after providing prudently for contingency.

    — Rahul V. Sagar, Chief Executive Officer & Executive Director

Debt

  • Spread Reduction Debt · Ongoing · Medium confidence Reduction
    Of course, we will continue to discuss with the lender for reduction of spread as well.

    — Rahul V. Sagar, Chief Executive Officer & Executive Director

Risks & concerns

  • Lack of specific plans for future cash utilization

    medium

    Analyst projected a ₹450 crore cash pile by March 2026 and asked about growth plans, debt repayment, or Nirlon House ownership, but management only gave a general statement about maximizing shareholder distribution.

    Analyst acknowledged

  • No further update on restructuring plans

    low

    Management proactively stated there has been no further update regarding any restructuring plans and requested questions to focus on current operations and financials.

    Management acknowledged

Areas of evasion (3)

  • Future rental income growth percentage
  • Specific plans for cash pile utilization
  • Prepayment penalty clauses on loan

Q&A highlights

1 direct, 1 evasive
Vacancy and Rental Income from Morgan Stanley exit Direct
essentially as of 30th June 2025, all the spaces vacated by Morgan Stanley have either been licensed, license has commenced or has serious commitments with LOIs have been signed. So, there is no real issue there.

Clarifies the successful re-leasing of a significant vacated space, confirming future revenue visibility and mitigating concerns about prolonged vacancy.

Asked by Ashok Jain

Future Rental Income Growth and Occupancy Partial
I mean, we do not want to comment specifically on this Y-O-Y because there are different commencement dates, there are different rent free periods.

Reveals management's reluctance to provide specific forward-looking growth rates despite positive re-leasing news, leaving investors to infer future performance from reported numbers.

Asked by Ashok Jain

Cash Pile Utilization and Shareholder Distribution Evasive
Whatever cash surpluses are there; we do not want to confirm the number you said right now. We do not want to confirm. As we have been saying, and as we have been doing, the company will endeavor to maximize its distribution to shareholders using a surplus cash flow after providing prudently for contingency.

Highlights a significant projected cash surplus and management's non-committal stance on its specific use, including debt repayment or increased dividends, creating uncertainty for investors.

Asked by Ashok Jain

2 min read 6 chapters

Detailed narrative

Strong Q1 FY26 Financial Performance

Nirlon reported a robust Q1 FY26, with total income reaching ₹167 crores, marking a 6% year-on-year increase. EBITDA grew by 8% year-on-year to ₹132 crores, achieving a healthy margin of 78.93%. Profit after tax (PAT) saw a significant 17% year-on-year growth, totaling ₹58 crores, with a PAT margin of 34.95%.

Successful Re-leasing of Morgan Stanley Vacated Space

The company successfully re-leased or secured commitments for nearly all of the 280,000 square feet of space vacated by Morgan Stanley, with approximately 269,000 square feet at NKP licensed or agreed to be licensed to new tenants including Deutsche Bank, Barclays, MUFG, Citi, and EY. New leases were signed at higher rates, approximately ₹180-185 per square foot, with annual escalations, representing a significant improvement over previous agreements.

High Occupancy Rates Maintained

Nirlon maintained a strong average occupancy rate of 97.5% across NKP and Nirlon House for Q1 FY26. While there was an interim period of vacancy due to Morgan Stanley's staggered exit, management confirmed that all vacated spaces are now either licensed or committed, with the full impact of new license fee commencements expected to be reflected in Q2 FY26 results.

Dividend Proposal and Cash Flow Management

The Board proposed a final dividend of ₹11 per share for the financial year ending 2025, subject to shareholder approval. Regarding future cash utilization, management stated the company would endeavor to maximize distribution to shareholders from surplus cash flow after prudently providing for contingency, without confirming specific plans for a projected ₹450 crore cash pile by March 2026.

FSI Utilization and Development Potential

As an IT Park, Nirlon has an FSI eligibility of approximately 5, plus fungible depending on road width. The company has currently utilized around 2.7 to 2.8 FSI, indicating significant remaining development potential within its existing land parcel. Management clarified that the company does not possess Transferable Development Rights (TDR) as it has not handed over any amenities to the government.

No Update on Restructuring Plans

Management proactively informed participants that there has been no further update regarding any restructuring plans. They requested that questions during the call focus on the operations and financials of the quarter under review, assuring shareholders that any definitive decisions on these matters would be communicated promptly.

This is an AI-generated summary of a publicly available earnings call transcript.
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