Nirlon

Nirlon Limited reported a robust Q3 FY26, with total income growing 6% year-on-year to INR 173 crores. EBITDA for the quarter increased by 1% YoY to INR 135 crores, resulting in a strong EBITDA margin of 77.93%. Profit After Tax (PAT) stood at INR 69 crores, with PAT margins of 40.04%. For the first nine months of FY26, the company achieved a total income of INR 509 crores, a 5% YoY increase, and an EBITDA of INR 400 crores, up 3.5% YoY, maintaining EBITDA margins at 78.53%. PAT for the nine-month period was INR 275 crores, with PAT margins of 54.1%.

The company maintained a high operational efficiency, with the occupancy rate for its properties, including NKP and Nirlon House, standing at 99.7% for the quarter. As of December 31, 2025, approximately 7,800 square feet remained vacant across both properties. During the quarter, Nirlon successfully renewed approximately 25,000 square feet of space with Citi, with the new rental rates for this renewed space noted to be 'north of 185' per square foot, indicating a significant increase from previous rates.

Management clarified that the primary driver for increasing rental income would be through contracted escalations embedded in existing license agreements. While there are potential opportunities to re-license vacant spaces at higher market rates, this is contingent on actual vacancies. The company does not intend to compare its rental rates directly with other micro-markets like BKC or Powai, instead focusing on securing the best possible commercial terms based on creditworthiness and tenant profile. The entire period of agreements is contracted, and rental resets to market rates typically only occur with pure vacancies.

The Board declared an interim dividend of INR 15 (150%) per share for FY26. The company reported a cash and bank balance of approximately INR 325 crores as of January 31, 2026. While analysts inquired about the possibility of a special dividend or buyback given the high cash balance and recent budget changes, management stated that the final dividend would be decided after the year-end performance review. They also noted that a buyback is currently constrained by a book value debt-equity ratio condition (less than 2:1) which the company does not currently meet, but this is under evaluation.

Nirlon Limited currently has no significant plans or proposals for vertical expansion, such as redevelopment of NKP, or for expanding into other cities. Management reiterated that the focus remains on optimizing existing assets and maximizing income through contracted escalations and opportunistic re-licensing. No further updates were provided regarding any restructuring plans, and the company committed to informing shareholders if any definitive decisions are made in these areas.

The company transitioned to the new tax regime from Q2 FY26, which has significantly contributed to the increase in EPS. Regarding finance costs, management clarified that the analyst's calculated 9.7% annualized cost was influenced by Ind-AS accounting impact, specifically the discounting of security deposits at present value, which is recognized as a finance cost in the P&L. The actual borrowing cost was stated to be lower, based on a one-month T-bill plus 233 basis points, reset monthly.