Nirlon Limited (500307) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Nirlon Limited Second Quarter First Half Fiscal Year 2024 Earnings Conference Call. [Operator Instructions] Please note this conference is being recorded. I would now like to hand the conference over to Mr. Amit Baker from Valorem Advisors. Please go ahead, sir.

Thank you. Good evening, everyone, and a very warm welcome to you all. My name is Amit Baker from Valorem Advisors, we represent the Investor Relations for Nirlon Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings conference call for the second quarter and the first half of the financial year 2024. . Before we begin, let me mention a short cautionary statement, as always. Some of the statements made in today's con call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from the anticipated. Such statements are based on management's beliefs as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's earnings call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Let me now introduce you to the management participating with us in today's conference call and hand it over to them for opening remarks. We have with us Mr. Rahul Sagar, Chief Executive Officer and Executive Director; Mr. Kunal Sagar, Promoter and Non-Executive Director; Mr. Manish Parekh, Chief Financial Officer; Mr. Justin Baber, Company Secretary and Vice President, Legal and Compliance Officer; and Mr. Manish Aradia, Vice President, Business Development and Investor Relations of the Nirlon Management Services Private Limited. Now without any further delay, I would request Mr. Kunal Sagar to give us his opening remarks. Thank you, and over to you, sir.

Thanks, Amit. Good evening, everyone, and welcome to the earnings call for the second quarter and first half of financial year 2024. Let me first take you through the financial performance of the company. For the second quarter of the financial year 2024, the company reported a total income of INR 151 crores, an increase of approximately 4.7% on a year-on-year basis. EBITDA stood at INR 121 crores, which grew by about 3% on a year-on-year basis, representing an EBITDA margin of 8.21%. Profit after tax was INR 52 crores, witnessing a growth of approximately 30% on a year-on-year basis, while PAT margins were 34.79%. In the first half of the financial year 2024, the company reported a total income of approximately INR 300 crores, an increase of 6% when compared to the first half of the financial year 2023. EBITDA stood at INR 238 crores, an increase of 5% year-on-year, representing an EBITDA margin of 79.31%. Profit after tax was INR 102 crores, increase from 87% year-on-year, representing a PAT margin of 34.13%. On the operational front, we are pleased to inform you that Phases 1 to 4 of NKP has led a 0 water certification in October 2023. This is in accordance with our focus on consistently bettering our sustainability initiatives, which has always been a large part of our development ethos. The average occupancy rate for the company that is NKP as well as Nirlon House combined, increased to 99.6% for quarter 2 2024. As on 30th September, approximately 13,000 square feet of area [indiscernible], including -- moving in Nirlon House. Corrections renewed approximately 397,000 square feet at NPK and E&Y has expanded space by approximately 15,000 square feet. As regards the regular questions from shareholders and investors about the potential restructuring or other possible value of ticket measures, including to make dividends more tax efficient in the hands of investors discussions and consultations with relevant parties are continuing. The company understands that these are relevant and important aspects for investors and shareholders and will communicate any decisions taken in this regard to them. This will conclude our opening remarks. I open the floor to questions. Amit, do you want to go ahead with questions, please?

I now hand the call over to Mr. Kunal Sagar from Nirlon Limited for closing remarks.

Amit, can you confirm whether there are any questions from any participants?

We just got questions in. Our first question will come from Raja Mahotra of Hero Logical [indiscernible].

Let me congratulate everybody for an outstanding -- absolutely outstanding set of results. We also had a wonderful visit to your site and that is also complement for 1 of the best assets of your kind in the Mumbai region. So it's not in a lot of India. Thank you for preempting the thoughts in the mind. But is there any other addition you'd like to do on that basis of restructuring or we just let it as is? .

Thank you for your visit, and thank you for your kind words. We really wanted to make the statement on the restructuring, et cetera, upfront so that it was clear to all participants straight away. So we'd like to stay with that statement. We're happy to answer other questions if you have any.

None, except that one thought, which we carry from the visit is, while, of course, you have restated earlier that you were almost built out on the site. But seeing the immense demand, it seem that maybe a partial fee could be tried out. That may not be like a question, but it may be taken as a suggestion or comment.

Thank you for mentioning that.

The next question will come from Harshit James with Flair Investments.

On your last earnings call, you have voluntarily mentioned that we are looking to sell the Nirlon House. What is the status of that development, sir, by when can we expect that to materialize?

Mr. James, what we had mentioned, if you remember, the next [Technical Difficulty]. Can you hear me, Mr. James?

Yes, sir

In the last -- in the previous call, if you remember correctly, we had mentioned that we were working on various options in terms of how to monetize or to unlock some value from the Nirlon House, we hadn't specifically mentioned whether it will be a sale or a redevelopment or something else. That is an area which we are focusing on, and we are making some progress in that regard. We have nothing in terms of a specific way forward on that because we are evaluating various options and going through the process of setting what would be the most appropriate one. So what we'd like to leave you is to say that we are cognizant of that and are working towards the kind of appropriate provision or an appropriate monetization from Nirlon House. We don't want to be more specific at this point until we know what shape or form that will take because there are various formalities and visits that we need to put in place before we actually take that decision. Rahul, do you want to add something?

No, I think that's fine. What we had said was we were looking at the best way to monetize the asset, which is exactly what we are reiterating. And we're looking at the best option on the various methods available to monetize the assets to the maximum benefit for the company, and we just want to reiterate that here, nothing more.

It's worth recognizing that Nirlon House has held in an undivided share with another entity which is a public trust. So certainly there are various issues that need to be addressed and need to be clarified when we move forward and while we move forward. So that is the process which we are presently going forward with the guidance of our more renovated shareholders.

Okay. So there are 2 options regarding the Nirlon House either we will see it or we will redevelopment, right?

So those are 2 options, there may be others, there may be various others that also come up during the course of our discussions. We don't -- as I said, we will want to preempt any as it depends on how certain regulations and what we need to do within the structure that we have with Nirlon House, what is the most experience to move forward.

And any thing, sir, with which we are planning to move?

We wouldn't want to comment on the time frame this now. Once we have a better idea of that, if that is something that is more definitive, we will [indiscernible].

Okay. And if at all, we are planning to sell it, and we have those 5 years of moratorium in our hand and balloon structure. We are not required to pay any principal loan payment. So is it also believe that the amount is received from the sale of Nirlon House, will they reward us to the shareholders in the form of dividends?

Jain, we hear we hear your question, I would appreciate that's not something that we'll be able to comment on at this stage.

Look like what a use of cash we have? Like are you planning for an expansion, that's my question? After sale, with the cash, what is the plan?

when we have more visibility on the transaction, that will be a question that we can answer with more confidence and with more [indiscernible]. It will be more relevant in that state, not just now.

Okay. So because this was never a month. It was only after the long shareholders, sir, but only after the last con call this came to myself, I'm just asking these questions.

No, that's fine.

Yes, yes. we think are all are too much done now. We are going to be asking and we currently understand the new guys are trying their level be. So that it's nothing on the [indiscernible]. This was on Nirlon House, nothing sir.

The Next question will come from Arun Malhotra with CapGrow Capital.

And congrats on the good numbers. I think it has been quite frustrating for the minority shareholders in the last 24 months on the slow progress of the restructuring. Every time we hear the same comment, we are still discussing with the shareholders. Can you put us now, at least let us know what direction you are moving, what the regulatory hurdles are and also give us some sense of the time frame? Because the sense what we are getting is that the management and the main shareholders, the majority shareholders are least concerned about the minority shareholders, so could you comment on this? .

Mr. Malhotra, the comment we like make is that we are deeply concerned about minority, majority and any shareholders. We are trying to communicate as much as we can to you but the nature is complex, and it has various aspects that that we need to look at, which we've mentioned several times on this call. We understand your frustration, and we appreciate your question. There's nothing more unfortunately that we would want to add at this day because we would not want to give any answer that is [indiscernible] in any way in terms of whether we are leading towards ABOCs that there would be rather a situation where we were prudent in terms of our answer. And then Q1, there is a definitive time to give you rather than an answer something away perhaps get more confusion or mislead people in any way. Again, we do recognize your frustration on the IP

I appreciate that. But you're still -- your answer is devoid of any concrete statement. You said we are concerned. But where are the actions? Why is it taking so long? You need to give us the minority shareholders some kind of time frame that by this, this is the deadline by which we should be able to -- this is ours and that we should be able to dissolve this issue?

We hear you. We do not want to take what you are saying. We are not intending to make a concrete segment. We are simply taking the tax as the time today. So we will not contradict what they're saying in any way, except to say that we once again take what you're saying on board on this matter.

Any time frame you could give us?

Sorry, it would be misleading if we give you any more information than we ourselves have at this point. at any kind of time frame that we thought was credible, we totally mentioned in it.

so certainly mentioned to you. So is it possible -- see, I understand that the majority shareholder is in Singapore. Is it possible to have 1 out there representative answer these questions for the minority shareholders reviews because I believe they would be the ones who would be taking the decision on behalf of the main on that, that's not a brand that we followed. We as a management discuss with them and try and give a very constructive discussions with them, and we try to get as clear a picture as we can for shareholders. We hear again what you have to say.

Sure.

My request would be if we could have some representation from them in the next call. And lastly, could you give us a sense of the micro market, the pricing trends, the supply?

Even though, the to market is given the micro market going on in our area.

Yes. yes.

Yes. So I mean, by and large, will be we are fly focused, of course, on -- and we feel that listing in our asset is going fairly well positively, as you know, we don't have much bigger needs. We are well aware that there will be additional supply in our micro market in the next few years as well as in other parts of Mumbai and Maharashtra as well as Bangalore where Hyderabad, which are really the IT, ITES hubs, so to speak. So while we are cognizant of the fact that there will be additional supply in the years to come in the micro in our micro market, we are equally following the additional supply that's going to come in outside of the micro market as well. But right now, to answer your question, we feel that licensing is fairly positive for us. We feel that the demand is fairly positive in NKP. We don't know what the other people in our micro market are doing specifically in terms of the licensing and in terms of debt, we don't want to comment on that. But for us, we see that the demand is fairly positive as well as the right thing and the future demand as well in the near future, we see it to be steady positive as well.

I will now hand the call back over to management for any closing remarks. Please go ahead.

Amit, can you please confirm that there are no further questions. Just take a couple of minutes to confirm there are no further questions, then let us know.

Yes, I can hear you. I can hear.

Can you confirm whether there are some more questions or whether there is some -- so that we know whether to continue?

Sure, sure. Sure. Am I audible now?

Yes.

Oil. Okay. Okay. All right. So we'll wait for a couple of minutes and then maybe. Sir, I think there are no further questions now.

All right, Amit, thank you. Thank you all for joining us today, and we wish everyone a happy Diwali in advance and hope to see you again in subsequent calls. Thank you for your interest.

On behalf of Nirlon Limited, this concludes the conference. Thank you for joining us, and you may now disconnect your lines.