Nirlon Q2 PAT falls 51 per cent as prior-year tax credit skews comparison

Nirlon derives almost all its revenue from licensing office space and providing related services at Nirlon Knowledge Park (NKP) in Goregaon, Mumbai. The company reported a 51.3 per cent YoY decline in profit after Tax (PAT) and total comprehensive income to Rs 71.9 crore for the second quarter of FY27, largely because the year-earlier period had benefited from a substantial tax credit.

Profit in Q2 FY26 had included a Rs 54.7 crore tax credit, while Q2 FY27 recorded a tax expense of Rs 24.2 crore. Nirlon had moved to the new tax regime from Q2 FY26 and remeasured its opening deferred tax liability, resulting in a Rs 69.50 crore reversal during the earlier quarter. The comparison therefore understates the stability in the underlying property operations.

Total income rose 3.1 per cent YoY to Rs 174.1 crore in Q2 FY27. Licence fees increased 2.4 per cent to Rs 149.9 crore, while other operating income, including common-area maintenance (CAM), rose marginally to Rs 19.1 crore. Other income grew 45.7 per cent to Rs 5.1 crore.

Earnings before interest, tax, depreciation and amortisation (EBITDA) increased 2.7 per cent to Rs 136.5 crore, although the margin eased by 29 basis points to 78.40 per cent as expenses rose 4.4 per cent. Profit before tax grew 3.3 per cent to Rs 96.1 crore. On a QoQ basis, PAT rose 3.6 per cent from Rs 69.4 crore in Q1 FY27, while EBITDA margin expanded by 110 basis points.

Occupancy across NKP and Nirlon House remained at 99.8 per cent as of September 30, 2026, with about 6,800 sq ft vacant. NIUM India Pvt Ltd renewed about 37,000 sq ft at NKP that was due to expire in FY28. Nirlon had Rs 1,150 crore outstanding under its HSBC Bank debt facility against a sanctioned secured facility of Rs 1,230 crore.

As of 1:27 pm on November 2, 2026, Nirlon shares were trading at Rs 646.15, up 3.71 per cent from the previous close of Rs 623.05. The stock was about 0.6 per cent below its 52-week high of Rs 650.00. Over one year, the shares had gained 24.15 per cent, compared with an 8.48 per cent decline in the BSE 500, a relative outperformance of about 32.6 percentage points.

What This Means for Investors

The quarterly result reinforces the resilience of Nirlon’s operating asset rather than signalling a deterioration in its core business. Near-full occupancy, a tenant renewal and modest growth in licence fees support visibility of recurring income. With the completed office portfolio already almost fully occupied, however, near-term revenue growth is likely to depend mainly on contractual escalations and renewals rather than incremental leasing area. The slight margin compression also bears watching if property management and maintenance costs continue to grow faster than licence income.

The news is mixed from an earnings perspective because the PAT decline is primarily tax-related, while profit before tax and EBITDA continued to advance. Investors may therefore focus more on recurring operating income, occupancy retention and debt servicing than the headline profit comparison. The Rs 1,150 crore debt outstanding remains material against a business concentrated in one Mumbai office campus. At Rs 646.15, the stock trades at 15.73 times trailing earnings and 12.03 times enterprise value to trailing EBITDA, placing emphasis on the durability of rental cash flows and balance-sheet discipline.

Disclaimer: The article is for informational purposes only and not investment advice.