By Suhel Khan
While every investor is busy chasing the next big thing, one small-cap company is quietly minting money and sharing it with its investors in the good old-fashioned way: steady, reliable dividends. This under-the-radar company is not just surviving—it is thriving—thanks to enviable capital efficiency. The company squeezes maximum profit out of every rupee they invest as capital and then share the wealth with its investors via huge dividends. In a volatile market, which is like a lifesaving drug.
Could this company be a way of starting hidden income stream? Let us dig in…
Nirlon Ltd
A pioneer in manufacturing of synthetic yarns and industrial rubber products, whose turnaround story is lucrative, this is about Nirlon Ltd.
The company’s current market cap is Rs 4,595 cr and it boasts of a current ROCE (Return on Capital Employed) of about 28%, which beats all its peers in comparison. The industry median is 21%. In simple words, it means that Nirlon makes a profit of 28% on what it invests as capital in the business, or it makes Rs 28 profit on every Rs 100 it invests as capital.
What is interesting about Nirlon is its turnaround story, probably worthy of a Bollywood adaptation.
From 1988 to 2006, Nirlon successfully underwent bankruptcy restructuring and then commenced development of Nirlon Knowledge Park in 2006.
Known today as the Nirlon Knowledge Park (NKP), the property is approximately a 23-acre Information Technology Park located in Goregaon (East), Mumbai. The development of this landmark project began in phases from 2006, with the final phase i.e., Phase V completed in FY22.
The entire Phase- V was leased to JP Morgan Services India Private Limited for a period of 10 years with effect from December 2021. The other big occupants include names like Citibank, Barclays, Deutsche Bank, Morgan Stanley, JP Morgan, ICICI, IBM, Anunta, Starbucks, Subway, etc.
Nirlon Knowledge Park currently has a total chargeable area of approximately 3.06 million square feet.
Nirlon also co-owns 75% undivided interest in ~45,475 sq. ft. of the area in the Nirlon House building in a prime location of Worli in Central Mumbai.
One of the other factors that played a pivotal role in this turnaround story was when in 2015, Reco Berry Pvt Ltd, an affiliate of the Government of Singapore Investment Corp (GIC), acquired over 70% stake in Nirlon Ltd making it a promoter of the company. As of the quarter ending December 2024, Reco Berry still holds about 64% stake in the company.
Nirlon has a current dividend yield of 5.10% and is maintaining a healthy dividend payout of a huge 158%.
Nirlon saw its sales grow double from Rs 299 cr in FY19 to Rs 603 cr in FY24, which is compounded growth of 15%. And between April and December 2024, the company has already recorded sales of Rs 478 cr already.
The EBITDA (earnings before interest, taxes, depreciation, and amortization) between FY19 and FY24 grew from Rs 226 cr to Rs 477cr, which is a CAGR of 16%.
The net profits too have seen a huge jump from Rs 64 cr in FY19 to Rs 206 cr in FY24, which makes it a compounded growth of 26% in the 5 years.
Nirlon Ltd.’s share price went from Rs 298 in February 2020 to Rs 510 as on the closing of 21st February 2025, which is a jump of 71%.
Nirlon’s share is trading at a current PE of 21x which is as much as the current industry average. The 10- year median PE is however 31x while the industry median for the same period is 18x.
At a time when the markets are falling like a house of cards, Nirlons stock has held fort. The BSE Sensex has fallen by about 7.5% from almost 81,000 to 75,000 in the last 6 months.
In the same period, when most of the stocks withstood the worst of a ruthless market, Nirlon’s stock prices went from Rs 440 to around Rs 510, a 16% jump, making it clear that the company has all the ingredients of becoming the next possible multibagger.
The company did see its share of ups and downs when it comes to shareholding, as the company’s director Kunal Sagar sold his 1.48% stake in March 2024. However, around the same time, Nihar Nandan Nilekani, son of the co-founder of Infosys, Nandan Nilekeni, bought a 2.52% stake in the company, which has grown to 2.62% as of the quarter ending December 2024.
Foreign institutional investor BSREP IV FPI Two Holdings (DIFC) Limited own 7.72% stake in the company since September 2024. On the domestic front, ICICI Prudential Multicap Fund also holds 4.76% stake in the company.
As per the company’s latest investor presentation from February 2025, the Board of the Company has approved an interim dividend at Rs 15 per share (150%) for FY 2024-25 in the meeting held on 13th February 2025.
On the sustainability and continuity front, the presentation says that Morgan Stanley has given notices for vacating the approx. 449,000 sq. ft. it occupies, of which the last notices for approx. 176,000 sq. ft. were received in December 2024.
Nirlon says these spaces will be vacated largely in Q4FY25 and Q1FY26. Of this space, approx. 230,000 sq. ft. has already been relicensed to BNP Paribas (expansion), EY (expansion), ICICI Prudential (expansion) and Globeop SS&C (new occupant). Discussions are in progress for the balance.
BNP Paribas has also renewed approx. 156,000 sq. ft. it occupies at Nirlon Knowledge Park.
As on 31st December 2024, approx. 21,000 sq. ft. area was vacant in Nirlon Knowledge Park and Nirlon House combined. Of this, the major office portion was relicensed beginning January 2025, and 7,800 sq. ft. continues to be vacant.
Join the Party?
It would not be completely wrong to say that Nirlon is quietly making waves in the market. This small-cap star is showing how it is done: smart money management + steady solid dividends. Nirlons real estate transformation and comeback story with a huge 158% payout ratio are just some magnets enough to pull the right investors towards them.
This smallcap cash cow offers what many investors are always looking for – stability. Consistent dividends, even in tough times, make them a probable smart bet. It might not be flashy, but their performance is undeniable.
Could this underdog be the ticket to reliable income and the riches? Only time will tell.
But having Nirlon on the watchlist could prove to be a promising idea.
Disclaimer:
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Suhel Khan has been a passionate follower of the markets for over a decade. During this period, He was an integral part of a leading Equity Research organisation based in Mumbai as the Head of Sales & Marketing. Presently, he is spending most of his time dissecting the investments and strategies of the Super Investors of India.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.
