NIRLON LTD (NSE: NIRLON) Q2 2025 Earnings Call dated Nov. 13, 2024
Corporate Participants:
Nupur Jainkunia — Investor Relations
Kunal V. Sagar — Director
Rahul V. Sagar — Chief Executive Officer and Executive Director
Analysts:
Dilip Jain — Analyst
Samarth Singh — Analyst
Rajiv Malhotra — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q2 and H1 FY ’25 Conference Call of Nirlon Limited. [Operator Instructions] I now hand the conference over to Ms. Nupur Jainkunia from Valorum Advisors. Thank you. And over to you ma’am.
Nupur Jainkunia — Investor Relations
Thank you. Good afternoon, everyone. My name is Nupur Jainkunia from Valorem Advisors. We represent Investor Relations for Nirlon Limited. On behalf of the company, I would like to thank you all for participating in the company’s earning call for the second quarter and fourth half of the financial year 2025.
Before we begin, let me mention a short cautionary statement. Some of the statements made in today’s earning 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 those unanticipated. Such statements are based on management’s belief as well as assumptions made by information currently available to 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 earning call is purely to educate and bring awareness about the company’s fundamental business and financial quarter under review.
Now let me introduce you to the management participating with us in today’s earning call and hand it over to them for opening remarks. We have with us Mr. Rahul V. Sagar, Chief Executive Officer and Executive Director; Mr. Kunal V. Sagar, Director, Nirlon Management Services Private Limited; Mr. Manish B. Parikh, Chief Financial Officer, VP Finance and Mr. Ashish Bharadia, VP, Business Development and Investor Relations, Nirlon Management Services Private Limited. Without any further delay, I request Mr. Kunal Sagar to start with his opening remarks followed by financial and operational highlights of the company. Thank you, and over to you sir.
Kunal V. Sagar — Director
Thank you. It is a pleasure to welcome you to our earnings conference call for the second quarter and first half of the financial year 2025. Let us first take you through a summary of the financial performance of the company. During the quarter under review, the company reported a total income of INR163 crore which grew by 8% year-on-year and by approximately 3% quarter-on-quarter. The EBITDA was reported at INR131 crores representing an 8% growth year-on-year. EBITDA margins were about 80.55%. Profit after tax for the quarter stood at about INR57 crores, which also grew by 8% year-on-year, while profit after tax margins reported at 34.77%.
In the first half of the financial year 2025, the company reported a total income of approximately INR320 crores, a growth of 7% year-on-year. EBITDA stood at INR253 crores, an increase of 6% year-on-year, and EBITDA margins were 78.84%. Profit after tax was INR106 crores, an increase of 4% year-on-year and representing a PAT margin of 33.13%.
On the operational front, the average occupancy rate for the company as a whole, that is, NKP and Nirlon House combined was stable at 99.8% for the second quarter of the financial year 2025. As on 30 September 2024, approximately 7,600 square feet of area was vacant in Nirlon House and NKP combined.
In other updates, Morgan Stanley have to date given notices to vacate approximately 195,000 square feet of the total approximately 449,000 square feet occupied by them. Of this, terms have been agreed for relicensing approximately 139,000 square feet. Additionally, the company continues to see consistent interest for the balance space expected to be vacated by Morgan Stanley.
We are also happy to inform you that NKP was ranked second in the GRI India Awards in 2024 in the Sustainable Project of the Year category. With this we conclude our opening remarks, and open the floor to questions.
Questions and Answers:
Operator
Thank you very much sir. [Operator Instructions] The first question is from the line of Dilip Jain from Ayush Capital. Please go ahead.
Dilip Jain
Good afternoon, sir. I just had one question. So, we have relicensed 139,000 square foot as you have reported. Congratulations on that. What is the monthly rental rate per square foot at 80% efficiency? Can you please share the number? Thank you very much.
Kunal V. Sagar
Just a quick clarification. We haven’t yet licensed the 139,000 square feet. We have just agreed on terms for that 139,000 square feet, and as a result of that we wouldn’t want to specifically comment on what our numbers are for the 139,000 square feet. But the average approximate range at which we are renting now at 80% efficiency is between INR165 to INR175 per square foot per month with roughly about three to four months of license free period. I will just check with Rahul if has some clarifications off around that.
Rahul V. Sagar
No, this is, this is really what it is. It’s, it’s, yeah, INR139 is practically finalized but not concluded.
Kunal V. Sagar
Does that answer your question, Dilip?
Dilip Jain
Yes. So, just the terms have been agreed and the tenant has been finalized, but the final papers have not been done yet.
Kunal V. Sagar
Correct. We have to sign and register lease license agreement. Those are not yet done.
Dilip Jain
Okay. Okay. So that is going to be a 3-month to 4-month license free period along with this. That’s what you mentioned, right?
Kunal V. Sagar
Don’t connect it to the INR139. We are telling you the two separate points we are making. One is we have agreed on terms for INR139. Let’s not get into the specific terms before we sign license agreements. What we are saying is the general approximate range in which we are is INR65 to INR175 with about three to four months of rent free.
Rahul V. Sagar
And also, currently for the notices we have received from MSAS from Morgan Stanley for the majority of these notices we are still in the notice period, it is still ongoing. So, it’s usually for most of the cases, as you know, it’s a six month — it’s a six month notice period. So, the notice period is still, is still valid, so that you have the background. It’s not that the majority of these spaces are vacant. The notice period is still valid.
Dilip Jain
I understand. Okay, okay. And this is again going to come with a three-year 15% escalation clause, right?
Kunal V. Sagar
Those are standard terms which we are working on. We’re working on them to see they’re either the same or we try to improve them, but that’s the general. That’s our normal. Those are our normal terms at least.
Dilip Jain
All right. So as compared to something like a year or two ago, what’s the kind of Y-o-Y appreciation or a two-year appreciation that we have seen? Around 10% to 15% or more than that.
Kunal V. Sagar
We’ve always been a bit cautious about how we answer that because it depends on what base. In some cases, it may be 15%, 20%. In other cases, it’s 3% or 5%. It all depends on what base we are escalating from and what the specific circumstances are and what the terms are. So, it’s — we prefer not to really say that it’s 5% or 10% or 8%. In general, we’ve seen the trend has been reasonably positive, and that continues. I mean, the demand is strong and that continues.
Dilip Jain
Okay. All right. Okay, great. Thank you very much. Thank you.
Operator
Thank you. [Operator Instructions] We’ll take the next question from the line of Samarth Singh from TPF Capital. Please go ahead.
Samarth Singh
Yeah. Hi, good afternoon. Thanks for the opportunity. The first question, I just a question on the Safari Retreat ruling, does that affect us in any way? Have you looked at that, and any [Indecipherable] that company might get from that?
Kunal V. Sagar
Yeah, yeah. So, your question is with regard to the Supreme Court ruling on the GST input credit issue, correct?
Samarth Singh
Right.
Kunal V. Sagar
Yes, so, I mean, you know, I don’t want to get into too many details on the call, but yes, we are well aware of this, and whatever steps the company needs to take to ensure that if at all we are eligible to get this, to get a benefit of this input credit. I can tell you that we are absolutely aware of this issue, and we have done absolutely what we would like to do to put us in the best possible position that if at all import credit is being given on construction activity, we are in a position to avail of this credit to the maximum extent possible. So, it’s a good question.
Samarth Singh
Okay. So just in terms of just clarity, post this ruling now, is there, is there still any, you know, sort of ambiguity whether we can take benefit of the input credit?
Kunal V. Sagar
The issue is still playing out in the courts, right. So, whereas the initial judgment that we have seen has been largely positive and that has been welcomed by most in the industry, we just let it play out because there’s a difference between a positive ruling and actually getting the refund of getting the refund, so to speak. We will just leave it to that and let it play out. Yeah. So, essentially, we can say that if it is allowed and permitted by the courts and by the judiciary, we are in a position where we would like to avail of this particular input credit, and get this refund as well, subject, of course, to final — whatever the final ruling is, etc., etc., and what comes. How it is interpreted as well.
Samarth Singh
Got it. Okay, thank you so much.
Operator
Thank you. [Operator Instructions] We’ll take the next question from the line of Namit Mehta, an individual investor. Please go ahead, Mr. Mehta, I have unmuted your line, please proceed. Mr. Namit Mehta? The current participant is not answering. [Operator Instructions] The next question is from the line of Rajiv Malhotra from HCPL Parts company. Please go ahead.
Rajiv Malhotra
So, hi everyone. I thought, let me just congratulate you guys to do another outstanding set of results. So, as an investor now for many years, the only thing I feel is there’s going to be very little we can do in terms of increasing area. But I think it’s the restructuring of the company on a win-win situation for everybody, which is I think what everybody is looking forward to. You don’t need to be specifically answering any of it, but thank you for a great job. Thanks.
Kunal V. Sagar
Thank you, Rajiv. Appreciate it.
Operator
Thank you. [Operator Instructions] Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to Mr. Kunal Sagar from Nirlon Limited for closing comments. Over to you, sir.
Kunal V. Sagar
Thank you for participating in this earnings call. I hope we were able to answer your questions, and at the same time offer some insights into where we are today. If you have any further questions or would like to know more about the company, please do reach out to our investor relations managers at Valorem. Thank you.
Operator
Thank you, members of the management. [Operator Closing Remarks]