Buy EFC (I) Ltd for the Target Rs.375 by Choice Institutional Equity Limited
Robust Performance Across the Verticals
The Leasing vertical has sustained at 90% occupancy, expanding to 73,932 seats, with further additions in the pipeline. The D&B segment maintains a robust order book with strong growth visibility, while the Furniture division is scaling capacity alongside sustainable margin improvement.
We continue to be constructive on EFCIL owing to :
1) Seat additions of 20k/20k/15k are projected for FY26E/27E/28E, respectively, taking the total seats under management to 115k by FY28E (nearly doubling from FY25)
2) Revenue from the Design & Build (D&B) segment is projected to grow at a 50% CAGR over FY25–28E, while the Furniture vertical is expected to deliver a 93% CAGR over the same period. Both segments are anticipated to maintain healthy profitability, with EBITDA margins of ~25%.
3) We forecast EFCIL’s consolidated EBITDA to grow at a CAGR of 46% over FY25–28E, supported by our assumptions as discussed above.
Valuation: We maintain our BUY rating on EFC (I) Ltd. with TP of INR 375/share. We value EFCIL on our EV/EBITDA framework, where we assign an EV/EBITDA multiple of 10x for FY27E/28E, respectively (on a consolidated basis), which we believe is reasonable given its growth potential and margin profile.
Risks: Possible general slowdown in the domestic economy, wearing out/dwindling startup funding, chances of abating of offshoring/GCC trend and probable predatory pricing by larger competitors.
Q3FY26: Healthy Revenue Growth with Record-high PAT
* Revenue from operation came in at INR 2,696 Mn, up 5.9%/52.1% QoQ/YoY, respectively vs. CIE est of INR 2,540 Mn
? EBITDA (excluding OI) was reported at INR 1,117 Mn, up 0.8%/20.6% QoQ/YoY, respectively vs. CIE est of INR 1,276 Mn. While EBITDA Margin came in at 41.4%, down 209 bps/1084 bps on QoQ/YoY, respectively
* EFCIL reported its highest-ever quarterly net profit of INR 624 Mn, up 10.1%/54.2% QoQ/YoY, respectively, with a healthy PAT margin of 23.3%, improving by 88 bps/32 bps QoQ/YoY, respectively
* The Office Rental, D&B and Furniture verticals delivered strong YoY revenue growth of 40%, 76%, and 16%, respectively
* Total seats stood at 73,000 (vs 68,421 in Q2FY26 and 57,000 in Q3FY25)
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SEBI Registration no.: INZ 000160131
