Nirlon Limited — Q3 FY26 earnings call

Call held 11 Feb 2026

Management summary

Nirlon Limited reported a stable Q3 and nine-month performance for FY26, driven by contracted escalations and near-full occupancy. While financial metrics showed modest growth, margins remained robust. The company declared an interim dividend and highlighted its significant cash balance, though it remained cautious on committing to further capital allocation beyond its current policy, citing strategic limitations under the new tax regime and debt-equity conditions for buybacks.

Highlights

  • Total Income for Q3 FY26 was Rs. 173 crores, growing approximately 6% year-on-year.

  • EBITDA for Q3 FY26 stood at INR 135 crores, reflecting a 1% year-on-year growth, 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 reached INR 509 crores, a 5% year-on-year increase.

  • 9M FY26 EBITDA was INR 400 crores (3.5% YoY growth) with margins of 78.53%, and PAT was INR 275 crores (54.1% PAT margin).

  • The company maintained a high occupancy rate of 99.7% across NKP and Nirlon House as of December 31, 2025, with only ~7,800 square feet vacant.

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

  • The company reported a cash and bank balance of approximately Rs. 325 crores as on January 31, 2026.

Key financials

3 periods

Headline

  • Cash & Bank Balance
    ₹325 Cr
  • Occupancy Rate
    99.7%

Q3 FY26

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

9M FY26

  • 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.

Guidance & targets

Dividend

  • Interim Dividend per Share Dividend · FY26 · High confidence INR 15 (150%)
    Lastly, the Board has declared an interim dividend of INR 15 (150%) per share for FY'26.

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

  • Final Dividend Declaration Dividend · FY26 (final dividend in September'26) · High confidence To be decided after end of financial year
    any change in the dividend policy amount to be decided after the end of the financial year in the final dividend... there will be a final dividend in September'26

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

Revenue

  • Rental Income Growth Revenue · Going forward · Medium confidence Primarily through contracted escalations
    the increase in income is primarily going to come through contracted escalations.

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

Expansion

  • Vertical Expansion of NKP Expansion · At this point in time · High confidence No significant plan
    at this point in time, there is no proposal of land for any significant further increase in volume... no significant plan for any increase in volume in NKP.

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

  • Multi-city Expansion Expansion · Not right now · High confidence No significant plan
    Not right now, there is no significant plan or no significant proposal that we are considering at this point.

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

Rental Rate

  • Citi Renewal Rate Rental Rate · New renewal · Medium confidence North of 185
    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.

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

Risks & concerns

  • Single asset platform risk and lack of diversification

    medium

    Analyst questioned the risk of remaining a single asset platform and lack of multi-city expansion. Management stated no significant plans for vertical expansion of NKP or expansion to other cities currently.

    Analyst acknowledged

  • Reduced tax efficiency for REIT conversion under new tax regime

    medium

    Analyst suggested the REIT option might be less attractive under the new tax regime. Management agreed that REIT benefits are largely for companies under the old tax regime, implying a strategic limitation.

    Analyst acknowledged

  • Infeasibility of buybacks due to debt-equity ratio

    medium

    Analyst suggested buybacks as a tax-efficient capital return. Management stated that the company does not meet the book value debt-equity ratio condition of less than 2:1 required for buybacks, limiting this option.

    Analyst acknowledged

Areas of evasion (4)

  • Promoter eligibility for reclassification
  • Specific future dividend plans beyond interim
  • Multi-city expansion plans
  • Specific rental rate comparison to market

Q&A highlights

1 direct, 1 evasive
Strategy for increasing rental income with high occupancy Direct
So, basically, as we have said in the past, we have practically 100% occupancy in NKP, which is the primary asset of Nirlon. 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.

This question clarifies the primary mechanism for revenue growth given the company's near-full occupancy, indicating reliance on existing contract terms rather than new leasing opportunities.

Asked by Amoksh

Promoter eligibility for reclassification to public shareholder category after union budget changes Evasive
Let me just understand this in more detail and come back to you. I can come back to you in the next meeting also. Let me just understand this in more detail. You are asking whether I am eligible on a personal level or am I ineligible?

The management's deferral of this question indicates a lack of immediate clarity or willingness to discuss a potentially significant personal and corporate tax/regulatory matter for the promoter.

Asked by Ashok Jain

Utilization of excess cash for special dividend or loan repayment given historical payout and current cash balance Partial
Yes. So we do not want to speculate on exactly how much dividend we are going to pay or whether we are going to pay more. But this, as you know, for 25-26 is an interim dividend. And of course, there will be a final dividend in September'26, as there has been for the past few years. And yes, so basically, we would like to say that this is not the final opportunity.

This recurring question highlights investor expectations for capital distribution beyond the declared interim dividend, and management's cautious stance on committing to further payouts or specific uses for the substantial cash balance.

Asked by Ashok Jain, Laksh Jain

2 min read 6 chapters

Detailed narrative

Robust Q3 and 9M FY26 Financial Performance

Nirlon Limited delivered a solid financial performance for Q3 FY26, reporting a total income of Rs. 173 crores, a 6% year-on-year increase. EBITDA stood at INR 135 crores, growing 1% YoY, with strong margins of 77.93%. Profit After Tax (PAT) for the quarter was INR 69 crores, yielding a PAT margin of 40.04%. For the first nine months of FY26, the company achieved a total income of INR 509 crores, up 5% YoY, and an EBITDA of INR 400 crores, a 3.5% YoY growth, with PAT at INR 275 crores and a 54.1% margin.

Near-Full Occupancy and Contracted Rental Growth Strategy

The company maintained a high operational efficiency with an occupancy rate of 99.7% across its NKP and Nirlon House properties as of December 31, 2025, with only approximately 7,800 square feet remaining vacant. Management emphasized that future income growth would primarily stem from contracted escalations within existing license agreements. During the quarter, approximately 25,000 square feet were renewed by Citi, with new rental rates reported to be 'north of 185' per square foot with annual escalations.

Interim Dividend and Cautious Capital Allocation

The Board declared an interim dividend of INR 15 (150%) per share for FY26, consistent with past practices. Despite holding a significant cash and bank balance of approximately Rs. 325 crores as of January 31, 2026, management remained cautious about committing to any special dividends or using the excess cash for loan repayment. They indicated that the final dividend policy would be decided after the financial year-end in September 2026, based on the company's performance and cash balances.

Strategic Limitations Under New Tax Regime

Nirlon Limited transitioned to the new tax regime from Q2 FY26, which has implications for its strategic options. Management acknowledged that the benefits of converting to a REIT are largely realized when companies operate under the old tax regime, suggesting a reduced attractiveness for this strategic move. Furthermore, the company currently does not meet the book value debt-equity ratio condition (less than 2:1) required for buybacks, limiting this avenue for capital return to shareholders.

No Immediate Expansion or Restructuring Plans

Management confirmed that there are no significant plans for vertical expansion of the existing NKP structures or for acquiring land to increase volume. Similarly, there are no immediate proposals to expand operations into other cities, maintaining the company's focus on its current assets. Additionally, no further updates were provided regarding any potential restructuring plans, with management assuring shareholders of communication upon any definitive decisions.

Finance Cost Dynamics and Ind-AS Impact

The company's finance cost for the quarter was approximately 9.7% on an annualized basis, which includes an Ind-AS impact. Management clarified that the actual borrowing rate from lenders is based on a one-month T-bill plus 233 basis points, which resets every month. The Ind-AS impact arises from discounting security deposits at their present value, which is then recognized as a finance cost in the Profit & Loss statement, contributing to the higher reported finance cost.

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