Buy EFC (I) Ltd for the Target Rs. 275 by Choice Institutional Equities
Robust Performance Across the Three Verticals
EFCIL reported record revenue and PAT, driven by a strong momentum across its office leasing, design & build (D&B) and furniture manufacturing businesses. Office leasing remained robust with healthy seat addition and occupancy level, while the D&B segment delivered a record quarterly revenue and the Furniture segment witnessed a sharp YoY growth on a low base. The strong performance underscores the effectiveness of EFCIL’s integrated workspace solutions model, with increasing cross-synergies across all three verticals.
We continue to be constructive on EFCIL owing to :
1) Seat addition of 18k/15k/15k are being projected for FY27E/28E/29E, respectively, taking the total seats under management to 127k by FY29E. 2) Revenue from the D&B segment is expected to grow at a 39% CAGR over FY26–29E with EBITDA margin of 20%. The Furniture vertical is anticipated to deliver a 41% CAGR over the same period with EBITDA margin of 25%. 3) We forecast EFCIL’s consolidated EBITDA to expand at a CAGR of 27% over FY26–29E, supported by our assumptions as discussed above.
Valuation: We maintain our ‘BUY’ rating on EFCIL with a revised target price of INR 275/share (previously INR 375/share). We value the company on FY28E EV/Adjusted EBITDA multiple of 9x (earlier 10x). We have considered a relatively lower valuation multiple in view of the increasing contribution from lower revenue visibility businesses. Risks: Possible general slowdown in the domestic economy, dwindling of startup funding, chances of abating of offshoring/GCC trend and probable predatory pricing by larger competitors.
Q4FY26: Record high revenue and PAT
* Revenue from operations came in at INR 2,929 Mn, up 8.6% and 38.8%, QoQ and YoY, respectively vs. CIE estimate of INR 2,805 Mn
* EBITDA (excluding OI) reported at INR 1,436 Mn, up 28.5% and 31.3%, QoQ and YoY, respectively vs. CIE estimate of INR 1,220 Mn. EBITDA margin came in at 49.0%, up 759 bps QoQ and down 278 bps YoY
* RPAT was INR 689 Mn, up 10.3% and 43.6%, QoQ and YoY, respectively vs. CIE estimate of INR 604 Mn. RPAT margin came in at 23.5%, up 36 bps and 78 bps, QoQ and YoY, respectively
* Office Rental, D&B and Furniture verticals delivered a strong YoY revenue growth of 24.6%, 46.6% and 177.4%, respectively
* Total seats stood at 78,782 (vs 73,932 in Q3FY26 and 60,012 in Q4FY25)
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SEBI Registration no.: INZ 000160131
