# 1. Financial Performance ## A. Key Figures * **Total Income:** **₹167 Cr** Q1 FY26 (+6%) * EBITDA: ₹132 Cr Q1 (+8%) · 78.93% margin * PAT: ₹58 Cr Q1 (+17%) · 34.95% margin * **Cash & Cash Equivalents:** **₹173 Cr** as of Mar 2025 · **~₹450 Cr** projected by Mar 2026 * **Depreciation:** **₹55 Cr** FY26E * **PAT Guidance:** **₹230–240 Cr** FY26E ## B. Revenue Growth * **Resilient Rental Income:** 5% YoY growth achieved despite lower occupancy, reflecting **effective lease re-pricing and minimal downtime** during tenant transitions. * **Near-Term Upside:** Re-leasing of ~270,000 sq. ft. to reflect in Q2, supporting **incremental revenue visibility** with tightly managed handover gaps. * **Cash Flow Build:** Strong projected cash accumulation (~₹450 Cr by Mar 2026) driven by high-margin operations and **non-cash depreciation tailwind**. ## C. EBITDA & Margins * **Margin Resilience:** EBITDA and PAT margins held at exceptional levels (93% and 95%, respectively), underscoring **asset-light operating model and low variable costs**. * **Profit Growth Outpaces Revenue:** 17% PAT growth on 6% revenue expansion highlights **operating leverage and disciplined cost structure**. ## D. Cash Flow & Balance Sheet * **Straightlining Impact:** Current quarter reflects straightline rent accounting effects, with **further normalization expected in Q2 and Q3**. --- # 2. Occupancy & Leasing ## A. Key Figures * Average Occupancy Rate: 97.5% across NKP and Nirlon House (Q) * **Vacant Space:** **~280,000 sq ft** total as of 30-Jun-2025, with **269,000 sq ft at NKP** under LOI/licensing * **New Lease Rates:** **₹180–185/sq ft/month** (80% efficiency), equivalent to **~₹230/sq ft** on carpet area basis ## B. Vacancy & Re-leasing * **Rapid Re-letting Momentum:** Nearly all vacated space—primarily from Morgan Stanley’s full exit—has binding commitments or active licensing, with **no uncommitted vacancy** in former Morgan Stanley areas. * **Minimal Downtime:** Majority of 180,000 sq ft vacated only in late June 2025 (18th–22nd), limiting financial impact and enabling swift re-leasing within the quarter. * **Occupancy Transition Clarity:** Increase in reported vacancy from 98,000 sq ft (31-Mar-2025) to 271,000 sq ft (call date) reflects timing of Morgan Stanley’s staggered exit, now fully resolved. ## C. New Lease Rates * **Pricing Power Improvement:** New leases signed at **significantly higher base rates** and **steeper escalation terms**, including **15% every three years**, versus prior agreements. * **Benchmark-Grade Rents:** Current rates of ~₹185/sq ft (80% efficiency) equate to **~₹230/sq ft on carpet basis**, positioning asset competitively in micro-market. ## D. Tenant Renewals * **Anchor Tenants Reinforce Stability:** Citi renewed **196,000 sq ft** and Accenture licensed **28,000 sq ft** at NKP, underscoring continued demand from marquee tenants. --- # 3. Development & FSI ## A. Key Figures * **Interest Rate:** **7.6%–7.68%** (current range) · **Spread: 233 bps** (up from 200 bps) ## B. FSI Utilization * **Conservative FSI Strategy:** Company is electing to utilize **less than eligible FSI** on its Mumbai land, with no pending handover for TDR generation and **no TDR currently available**. ## C. Land Development Rights * **No Monetizable TDRs:** Development rights are land-specific and non-transferable; **no TDRs exist** as no qualifying asset transfers (e.g., roads) to the government have occurred. * **Non-Financializable Eligibility:** Unused development eligibility **cannot be converted into a financial asset** or deployed at other sites like GIC or NKP. * **Stalled Progress:** No significant advancement reported on Nirlon House during the quarter. --- # 4. Capital Allocation ## A. Key Figures * **Final Dividend Proposed:** **₹11 per share** for FY2025 (subject to approval) * **Outstanding Loan:** **₹1,150 Cr** referenced as potential balloon payment target * Projected Cash Balance: ₹450 Cr projected for 31st March 2026, but not confirmed by management ## B. Dividend Plans * **Shareholder Returns Prioritized:** Board proposed final dividend, with **potential for future increases** as part of surplus cash allocation, though no commitments made on capital structure actions. ## C. Cash Deployment * **Strategic Options Under Review:** Management evaluating use of cash for **debt reduction**, **acquiring full control of Nirlon House**, or **new growth initiatives**, pending final decisions. * **Tax Regime Decision Imminent:** Final election between old and new tax regimes expected by **September 26**, with announcement to follow promptly. --- # 5. Risks & Lease Transitions ## A. Timing Gaps * **Headline:** Short transition periods between tenant exits and new lease commencements create timing mismatches, with gaps as brief as **15 days to under a month**, affecting period-on-period financial comparability. ## B. Rental Reversion * **Headline:** Rental reversion in the **170–185 range** (likely per sq. ft.) remains unquantified due to heterogeneous commercial terms and differing license fee structures across former Morgan Stanley spaces. --- # 6. Guidance & Outlook ## A. Rental Growth View * **No Specific Rental Growth Guidance:** Management refrained from providing a precise Y-o-Y rental income growth figure due to **varying lease commencement dates and rent-free periods**; investors directed to IR reports for license fee trends. * **High Single-Digit Growth Implied:** A future annual rental growth rate in the **high single-digit range** was suggested as a reasonable assumption, though subject to non-uniform lease comparisons. ## B. Financial Impact Timing * **Full Relicensing Impact Expected by Q2:** The financial results will fully reflect the relicensed space from Q2 onward, with no further licensing delays anticipated.