01 — At a Glance
The IT Park That Became a Dividend Machine
- 52-Week High / Low₹615 / ₹445
- FY25 Revenue (Full Year)₹636 Cr
- FY25 PAT (Full Year)₹218 Cr
- TTM EPS₹36.5
- Q3 EPS (Dec 2025)₹7.69
- Book Value₹51.5
- Price to Book9.64x
- Dividend Yield5.25%
- Debt / Equity2.47x
- Interim Dividend (FY26)₹15/share
Auditor’s Opening Statement: Nirlon closed Q3 FY26 with ₹170 Cr revenue (+5.3% YoY), ₹69 Cr PAT, a 40% profit margin, and just declared a 150% interim dividend — meaning they’re handing back ₹15 per share when they’ve earned about ₹10 per share in the quarter. They’re not just returning cash; they’re returning cash they don’t have yet. It’s financial confidence bordering on magical thinking. The stock is down 2.77% in the past three months anyway, because apparently, profitability and massive payouts confuse the Indian equity market.
02 — Introduction
The Company That’s Basically Five Tenants In A Building And A P&L
Nirlon Ltd used to make synthetic yarn. Then it went bankrupt from 1988 to 2006. Then it figured out that owning a building in Mumbai and leasing it out was infinitely better than manufacturing textile products, because — let’s be honest — buildings don’t fire back, don’t have quality issues, and never miss their payment deadlines if the tenant is JP Morgan.
Today, Nirlon owns Nirlon Knowledge Park (NKP), a 23-acre IT park in Goregaon East, Mumbai, with 30.6 lakh square feet of rentable space. It also co-owns 75% of Nirlon House in Worli (45,475 sq ft). That’s it. That’s the entire company. One building (for 99.7% of the revenue). Five-to-seven major tenants. A dividend policy that assumes cash will keep flowing forever.
The tenants read like a who’s-who of financial services: Citibank, JP Morgan, Deutsche Bank, Barclays, ICICI, IBM. All of them are corporates that signed 3-5 year leases with 15% escalation clauses built in every 3-5 years. So Nirlon doesn’t have to do anything — revenue grows by contract, occupancy stays at 99.7%, and the CFO probably spends more time in the Dubai travel lounge than in the office.
In February 2026, management held an earnings call where they essentially said: “We own a building. Tenants pay rent. We pay dividends. No growth targets. No capex. No surprises. Ever.” An investor asked about expanding to multiple cities. Management replied, “Not right now, there is no significant plan.” Translation: Touch wood, don’t jinx it.
Concall Reality Check (Feb 2026): When asked about revenue growth drivers, management said, “The increase in income is primarily going to come through contracted escalations.” That’s literally saying: “We’ve surrendered to inertia, and we love it.” It’s the financial equivalent of a civil servant who’s counting down to retirement.
03 — Business Model: Own Building. Collect Rent. Sleep Well.
The Business Model That Would Bore A Bank Manager Into Tears
The business model is so simple it barely qualifies as a business model. Nirlon owns a building. Corporations sign 10-year leave-and-license agreements. Rent escalates 15% every 3-5 years automatically. Nirlon collects rent, pays interest on debt (₹1,150 Cr), and distributes the leftovers to shareholders. Occupancy is 99.7%. The largest single tenant (40% of rentals) is secure because they signed an agreement that basically locks them in until 2034.
In Q3 FY26, one tenant (Citibank) renewed ~25,000 sq ft at rentals “north of ₹185 per sq ft” — a sharp upgrade from the previous rate which management conspicuously refused to disclose. This is the only growth lever: when a tenant’s lease comes up for renewal, Nirlon re-rates it slightly higher if market allows. But with 99.7% occupancy, there’s literally nowhere else for tenants to go, so they either renew or vacate, and even Morgan Stanley’s 15% departure didn’t create a crisis (the space was re-leased within quarters).
The building is funded by a ₹1,150 crore Lease Rental Discounting loan from HSBC. Interest is floating: 30-day T-bill + 233 bps, reset monthly. Debt servicing is rock-solid (4.02x DSCR in FY25), and the company literally has nothing else to do with capital except pay dividends and maintain the property.
NKP Occupancy99.7%Dec 2025
Top Tenant Share40%Rentals
EBITDA Margin78%Q3 FY26
Concentration Risk That Nobody Talks About: Top 7 tenants = 85% of gross rentals. If JP Morgan (40% of rentals) decides to move to Bandra, Nirlon’s entire story collapses into a 25,000 sq ft vacancy. Management says they’re “mitigated by long-standing relationships” and “security deposits of 6-9 months.” Translation: We hope JP Morgan doesn’t leave. That’s the risk management strategy.
💬 Do you think renting office space in Mumbai to global banks is a “business” or just “owning a bank account’s bank account”? Drop your hot take in comments!
04 — Financials Overview
Q3 FY26: The Numbers Nobody Questions Because They’re Always Right
Result type: Quarterly Results | Q3 FY26 EPS: ₹7.69 | Annualised EPS (Q3×4): ₹30.76 | FY25 Full-Year EPS: ₹24.21
| Metric (₹ Cr) |
Q3 FY26
Dec 2025 |
Q3 FY25
Dec 2024 |
Q2 FY26
Sep 2025 |
YoY % |
QoQ % |
| Revenue | 170 | 161 | 165 | +5.3% | +3.0% |
| Operating Profit | 132 | 131 | 129 | +0.8% | +2.3% |
| EBITDA Margin % | 78% | 81% | 78% | -300 bps | 0 bps |
| PAT | 69 | 58 | 58 | +18.9% | +19.0% |
| EPS (₹) | 7.69 | 6.47 | 6.48 | +18.9% | +18.6% |
The Tax Regime Plot Twist: In February’s concall, management explicitly flagged that Nirlon shifted to the new tax regime from Q2 FY26 onwards, and “EPS lift is also significantly due to the change into the new tax regime.” Translation: 18.9% PAT growth isn’t entirely from better operations; part of it is from paying lower tax. Strip that out, and the business grew maybe 8-10% organically. Not bad, but also not why the stock trades at 13.6x P/E. Fair value P/E for a stable real estate rental company should be 10-12x.
05 — Valuation: The Range Everyone Pretends Doesn’t Matter
What Is This Building Actually Worth?
