Nirlon Limited (500307) Earnings Call Transcript & Summary

I just have one more follow-up question that license fee income grew by only 0.9% quarter-on-quarter. So, what limit the growth in this quarter?

Mr. Jain, these are all contracted license agreements, contracted terms and conditions. So as and when the escalations -- you may see some increases in the revenues or the license fees or as and when licenses are expiring and we are renewing and getting new licenses, you may see some change in the revenue for that particular quarter, but these are all contracted licenses with the existing licensees. So, it will be exactly as per the contracted -- the license agreement. So it will be exactly as per the contracted license agreement.

And one more question. Our EBITDA margins have moderated sequentially. So should we expect margins to remain around the current levels?

EBITDA margins steady or what's your question?

EBITDA margins continue to remain healthy sequentially.

We hope to continue [indiscernible] to increase all the relevant -- want to improve. So while our endeavor is always to improve the relevant numbers, including the EBITDA margins, which is a very important number, we feel that based on the contracts we have in place, they should not be very -- they should not fluctuate greatly steady. It's a good question. Thank you.

Next question comes from the line of Akshay Sawla, an individual investor. [Operator Instructions]

I just wanted to ask that is growing GCC a big issue for us going forward?

What is the big issue growing?

GCCs. GCC, global capability centers.

Yes. No, no. Understood. Understood. So basically, what we of course are trying to get as much information and details, et cetera, et cetera, with regards to GCC because GCCs, as you know, are a very good source of real estate -- a very important source of real estate demand in Mumbai, Maharashtra as well as in India. And we feel that any growth in the number of GCCs in India is only going to help the office market significantly. And this would really be the right direction to go in growth in terms of increase in the number of GCCs in India as well as increase in the number of functions, increase in the scope of work of existing GCCs in India, increase in the scope of work of future GCCs in India. All these we feel are very important and would be positive. As you know, there are significant GCCs compromise a large part of the office market -- of the office demand in India, in Mumbai and in Maharashtra as well.

Next question I had regarding basically any other specific trend maybe you are seeing in the Goregaon micro market. Can you basically throw some light on that?

Yes. So I mean, look, the issue for us really is that because our occupancy is plus/minus full, we have no significant vacancies. A lot of the demand is obviously going somewhere else. And because of this fact, we don't get a lot of the live inquiries or the serious inquiries as well because there's no space here. So we -- obviously, we are aware that there are other real estate assets, other commercial assets in the micro market of NKP as well as for the North, for the East, Southeast. And we can only monitor them on a general basis, not very specifically because it's more important to look at our business and the trends that are going to affect our business. So yes, of course, there will always be other assets, there will always be other commercial complexes wherever you are. This is perfectly normal. And we feel also that if Goregaon or Western Suburbs is growing as a micro market for office as an office location as a commercial office/IT location, it's very positive for the area, for the region as well as for a lot of the companies here. The fact that the Western Suburbs and Goregaon are growing well as an international office location hub to get the right international company to get the right MNCs into this area, whether they come to our complex or somebody else's office asset or development. In general, it's extremely positive if the micro area grows as well.

[Operator Instructions] Next question comes from the line of Shyam Khan, an individual investor. There is no reply from the line of Mr. Khan -- Yes, please go ahead.

So my question was regarding the dividend. So we in FY '26 gave a really good dividend. And moving forward, what is the guidance on the dividend basis? So will it improve or be stable at the current level it will reduce down back how it was in FY '25. Can you just throw some light on the dividend front?

So firstly, we don't want to make a comment on what the dividend will be for the future years. As you know, in the past few years, we have been paying an interim dividend and then a final dividend after the AGM in September as well. Over the past few years, it was INR 26 a share this year for the financial year '25. We have increased it to INR 30 a share. And going ahead, 26, 27, Mr. Khan, it's a little bit -- we just don't want to specifically say what the dividend will be. It has not been internally discussed as well. Our focus is on improving -- is just improving the park and improving the rentals, et cetera, et cetera, what any other management would do, what the management should do to improve the performance of the numbers and keep the park at an international level so that we are in a position to do the best we can for the shareholders.

Sir, I also have another question. So regarding the recent days, the stock also went very well up. And looking at the commercial real estate trends, we are getting yield somewhere around 79% overall in India as well. So, what is the current rental yield that we are seeing in the properties that we have? So what's the market value of our property and what exactly is the scenario over there?

So basically Mr. Khan, if you look at the numbers, FY '26 and Q1 '27 also, you can see that NKP is fairly consistent and the occupancies are high. The numbers are consistent. Vacancies are low costs are basically -- the cost base is steady and consistent. The interest cost is well under control and is being carefully monitored. Steady and consistent. The interest cost is well under control and is being carefully monitored. No exponential issues there in terms of any of the cost. So this is really our focus to ensure that we get the best possible, best possible A-grade licensees who are going to really ensure that our numbers continue to look strong and positive and increase as well. In terms of the yield or whatever calculation that is, I mean, you have all the numbers, you can look at the numbers and you can make any calculation in terms of yield, in terms of the dividend, et cetera, fairly easily. So I'm not exactly sure what yield you were asking. But I think it's not once all the numbers are there in the disclosure in the investor report. So I think you can get any yield you choose to on the existing numbers.

Next question comes from the line of Pranay Jain with DealWealth Capital.

My question is regarding the net debt position. Now how would you guide for the next couple of years? Currently, we are at 1.81. So how do you see this trajectory moving forward?

Net debt position. So net debt should be, I think, approximately as on date 1.81 -- net debt to EBITDA. Okay. So I mean -- we don't really see anything significant. We hope and it is our endeavor to maintain healthy EBITDA margins. Of course, our endeavor is to improve them, but also to make sure that they remain healthy. In terms of the debt, of course, as per the agreement, we have to start paying back in May '27. As per the existing agreement with the lender, we have to pay back for the next few years, 5% annually and then 25%. So to that extent, we will be guided by the terms and conditions of the agreement with the lender and that may not have some impact on the EBITDA margins. But basically, we'll be guided by the terms and conditions we have with the existing.

So as per this agreement, should we be around 1.5 in the next couple of years from 1.8?

Well, I have not done that calculation, and I can't do it right now. But I think it's not a very difficult calculation, but theoretically, but of course, we don't want to speculate on what any numbers will be going ahead. It's a little bit not practical or not really -- we are not comfortable making any speculative remarks with regard to any of the numbers. As I said earlier, we can only try our best and hope that the numbers remain healthy. And of course, all management will endeavor to improve the numbers.

There's no doubt that the numbers will remain healthy. We are very well placed. Second question is the hope on restructuring and whatever options that we have been evaluating, the discussions that we have been having. I understand it takes time, and we've been hearing this for a couple of years that efforts are on, but nothing significant is moving forward. So I really just wanted to understand the challenge or hurdle where we are at and what will help us move to the next stage of the favorable options on our table.

Okay. So firstly, really, it depends on what you consider as the next stage or what you consider is a favorable option. As you know, in '25, '26, we have moved to the new tax regime, which was fairly significant. And will keep you closely informed of any significant developments like these in the existing and in the future as well. But it's a little bit hard for us to specifically say what is favorable, what is significant. So yeah, you know, I mean , it's really, I don't, something that they will tell you. Thank you.

I mean it's something I meant to ask the co-promoter point of view, we've had talks earlier with GIC and also at Nirlon House where we've been looking at some kind of talks that helps us develop the space a little better among the different owners. So just wanted to know on these 2 bits, is there anything to look forward to from your discussions compared to last year? Or there isn't really anything to speak?

As of right now, to answer your question very frankly, there's nothing very significant to say. If there is something significant, of course, we have these calls every quarter, and we'll keep you closely informed.

Next question comes from the line of Jay Jain, an individual investor.

Sir, just one question. What is your average remaining lease tenure across your portfolio right now?

Average remaining lease tenure across the portfolio. Okay. We may not want to --

Speakers, we cannot hear you. Can you come a little closer to the mic and speak.

Yes. So it's a little bit tough for us to answer that right now because there are so many assumptions associated with that number and associated with that question. So just to answer right now on the spot will be a little bit challenging because we don't want to give any misleading statements or anything.

And just a small idea on that. Sir, any such large leases that are due for renewal in the near term, like, let's say, a year or 2 down.

Nothing. So not much in '27.

Thank you. Ladies and gentlemen, as there are no further questions, we have reached the end of question-and-answer session. I now hand the conference over to Mr. Rahul Sagar from Nirlon Limited for closing comments.

Thank you all for participating in this earnings con call. I hope we were able to answer your questions satisfactorily and at the same time, offer insights into our business. If you have any further questions or would like to know more about the company, please reach out to our Investor Relations managers at Valorem Advisors. Thank you, and thank you once again for all your questions. It's greatly appreciated, and we look forward to seeing you again next quarter. So thank you again, everybody.

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