Nirlon — Q3 FY26 earnings call

Call held 11 Feb 2026

Management summary

Nirlon Limited reported a solid Q3 FY26, with total income growing 6% year-on-year to INR 173 crores and PAT at INR 69 crores. The company maintained a high occupancy rate of 99.7% and declared an interim dividend of INR 15 per share. Management emphasized that future income growth would primarily stem from contracted escalations and re-licensing of vacant spaces at higher rates, while also addressing analyst queries on capital allocation and strategic expansion.

Highlights

  • Q3 FY26 total income reached INR 173 crores, marking a 6% year-on-year growth.

  • EBITDA for Q3 FY26 stood at INR 135 crores, growing 1% YoY, with EBITDA margins at 77.93%.

  • Profit After Tax (PAT) for Q3 FY26 was INR 69 crores, achieving PAT margins of 40.04%.

  • For the first nine months of FY26, total income was INR 509 crores (up 5% YoY) and EBITDA was INR 400 crores (up 3.5% YoY).

  • The company maintained a high occupancy rate of 99.7% across NKP and Nirlon House.

  • An interim dividend of INR 15 (150%) per share for FY26 was declared by the Board.

  • Approximately 25,000 square feet was renewed by Citi during the quarter, with new rental rates for this space noted to be 'north of 185'.

Key financials

2 periods

Q3

  • Total Income
    ₹173 Cr
    YoY +6%
  • EBITDA
    ₹135 Cr
    YoY +1%
  • EBITDA Margin
    77.9%
  • PAT
    ₹69 Cr
  • PAT Margin
    40%

9M

  • Total Income
    ₹509 Cr
    YoY +5%
  • EBITDA
    ₹400 Cr
    YoY +3.5%
  • EBITDA Margin
    78.5%
  • PAT
    ₹275 Cr
  • PAT Margin
    54.1%

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.

Capital allocation

high confidence
  • Debt Gross ₹1,150 Cr Cost 7.7%
    Okay, fine, I get it. Okay, and on the finance cost, so when we look at the cost for this quarter, the all-in cost works out to almost about 9.7%, so if we look at the Rs. 1150 crores loan and the total finance cost, annualized, this works out to about 9.7%. Our understanding is that actually the borrowing is at 90 day T-bill plus 233 bps, which works out to about 7.7. So how can we reconcile this? ... No, it is one month T-bill, 30 days T-bill plus 233.
  • Dividend ₹15/share (interim)
    Lastly, the Board has declared an interim dividend of INR 15 (150%) per share for FY'26.
  • Liquidity Cash ₹325 Cr
    Yes, my first question, sir. Sir, what is our current cash and bank balance, sir? ... Approximately Rs. 325 crores. ... As on 31st January.

What to watch in Q4 FY26

Promoter reclassification decision

Next meeting / in due course
Current Under evaluation by company and advisors; Rahul V. Sagar to check personal eligibility.
Target Decision announced regarding reclassification of promoter to public shareholder category.

Why it matters

Could impact corporate governance, shareholding structure, and potentially unlock value for shareholders.

Okay. Ashok, the company will continue to evaluate this in more detail with our advisors and then come to a decision. At present, no such decision has been taken. As always, if there is anything significant in this area, we will keep you well informed. ... Yes. Okay. I have not checked anything personally, but I will check in due course. Thank you.

Risks & concerns

  • Ineligibility for promoter reclassification to public shareholder

    medium

    Analyst questioned if Rahul V. Sagar, as an individual promoter, is eligible for reclassification, which could impact the company's shareholding structure.

    Analyst acknowledged

  • Constraints on buyback due to debt-equity ratio

    medium

    Management noted that a book value debt-equity ratio condition (less than 2:1) currently prevents buybacks, despite recent budget changes making them more lucrative.

    Analyst acknowledged

  • Complexity of Nirlon House due to strata ownership

    low

    Management highlighted that Nirlon House is a strata-owned building with multiple owners, leading to complexities and challenges for any significant changes.

    Management acknowledged

Q&A highlights

4 direct, 2 evasive
Strategy for increasing rental income with limited vacant space Direct
The increase in income is primarily going to come through contracted escalations. As and when there are vacancies, we have the potential opportunities for hire to re-license at higher rates, but that is potential.

Clarifies the primary drivers of future rental income growth, emphasizing existing contracts and opportunistic re-licensing rather than significant new space additions.

Asked by Amoksh

Eligibility for promoter reclassification to public shareholder category Evasive
Okay. Ashok, the company will continue to evaluate this in more detail with our advisors and then come to a decision. At present, no such decision has been taken. As always, if there is anything significant in this area, we will keep you well informed. ... Yes. Okay. I have not checked anything personally, but I will check in due course. Thank you.

Analyst pressed on Rahul V. Sagar's personal eligibility for reclassification, which could have implications for corporate governance and shareholding structure. Management deferred a direct answer.

Asked by Ashok Jain

Distribution of excess cash via special dividend Partial
No, I am absolutely not saying that. I am saying that if you see over the past few years, there has been an interim dividend and a final dividend. So, this is the interim dividend, which is consistent with the previous years as well. And we will take a call with regard to the performance of the company and the numbers, etc., at the point in time when we have to pay the final dividend.

Analysts questioned the conservative dividend payout despite high cash balances and higher EPS, suggesting a special dividend. Management indicated a final dividend would be decided later, not ruling out further distribution but not committing to a special one.

Asked by Laksh Jain

Reconciliation of finance cost (analyst's 9.7% vs company's 7.7%) Direct
Actually, this is Ind-AS impact. We have to discount the security deposit at its present value, so that cost goes as a finance cost in the P&L, so that is why it shows an increase.

Clarifies the discrepancy in finance cost calculation, attributing the higher reported cost to an accounting adjustment (Ind-AS impact on security deposit discounting) rather than a higher actual borrowing rate.

Asked by Satindar Singh

Vertical expansion (redevelopment of NKP) and expansion to other cities Direct
at this point in time, there is no proposal of land for any significant further increase in volume. ... Not right now, there is no significant plan or no significant proposal that we are considering at this point.

Management explicitly stated no current plans for redevelopment of NKP or expansion into other cities, indicating a focus on optimizing existing assets.

Asked by Amit Agicha

Comparison of NKP rental rates to other micro-markets (BKC, Powai) Evasive
we do not really want to comment whether somebody else's license fees are higher or lower than ours. Our endeavor is always to try to get the best possible commercial terms with the best possible license fees in terms of creditworthiness, profile, etc..

Management declined to provide a direct comparison of rental rates, emphasizing their focus on securing the best commercial terms based on various factors rather than direct market rate benchmarking.

Asked by Amit Agicha

Feasibility of buybacks given new budget changes and debt-equity ratio Partial
So, Mr. Jain, we will evaluate this in more detail. Primarily, as of now, what we understand is there is a condition of book value debt equity to be less than 2:1, which the company does not meet.

Analyst inquired about potential buybacks. Management acknowledged the possibility but highlighted a current hurdle related to the book value debt-equity ratio, indicating it's under evaluation.

Asked by Laksh Jain

New rental rate for renewed Citi space vs. previous rate Direct
if you look at what the new numbers are, it is approximately north of 185. And the previous numbers, the previous rentals for this particular space, I do not have that in front of me, but from what we can recollect, was not in that micro range at all. So, you can say, if you like, you can interpret it to say that there is some increase, but I do not want to discuss specific numbers out of context. But yes, it is north of 185 with annual escalation, etc.

Provides a specific data point for a recent significant renewal (Citi), indicating a substantial increase in rental rates (north of 185) compared to previous levels, validating the strategy of re-licensing at higher rates.

Asked by Laksh Jain

3 min read 6 chapters

Detailed narrative

Q3 & 9M FY26 Financial Performance Overview

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%.

Operational Highlights & Occupancy

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.

Rental Income Strategy & Market Dynamics

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.

Capital Allocation & Shareholder Returns

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.

Strategic Outlook & Expansion Plans

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.

Tax Regime & Finance Cost Clarification

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.

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