Q3FY21 Company Update - Nirlon Ltd - ICICI Direct

Nirlon's 9MFY21 (& Q3FY21) performance was fairly stable. Revenues in Q3FY21 grew 4.5% YoY to Rs. 80.1 crore. For 9MFY21, revenues grew 5% YoY at Rs. 227.8 crore, largely driven by rental renewal. Occupancy, which was at 97.5% was lower QoQ vs. 99.5% in Q2, as one tenant had vacated earlier than licence term. Nonetheless, the same is likely to be compensated as it will be largely leased again from March, 2021 onwards. EBITDA for 9MFY21 at Rs. 182.4 crore was up 6.2% YoY. PAT at Rs. 98.7 crore for 9MFY21 was up 23.2% YoY, also aided by lower interest, due to capitalisation.

Valuation & Outlook

We like Nirlon given its quality Grade-A office assets backed by Reco Berry - an affiliate of GIC. It is also on the verge of ramping up licensable area by ~1.16 msf with construction of Phase-V at NKP in FY22E. Thus, we expect its lease revenues to grow at 23% CAGR to Rs. 496 crore in FY20-23E. We roll over our NAV to FY21E. We maintain BUY on the stock with a NAV-based target price of Rs. 355/share (vs. Rs. 300/share, earlier). In our valuations, we conservatively consider a 9% cap rate and 15% discount rate. We see deep value in the stock as the planned expansion is not factored in the CMP.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Nirlon_CoUpdate_Feb21.pdf

Shares of NIRLON LTD. was last trading in BSE at Rs.284 as compared to the previous close of Rs. 284.9. The total number of shares traded during the day was 1572 in over 53 trades.

The stock hit an intraday high of Rs. 289.7 and intraday low of 281. The net turnover during the day was Rs. 447956.

Source : Equity Bulls

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